90% VTSAX & 10% Bitcoin (GBTC)

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
Topic Author
bg5
Posts: 193
Joined: Mon Jan 15, 2018 11:07 am

90% VTSAX & 10% Bitcoin (GBTC)

Post by bg5 »

This forum continues to be one of my best discoveries of my life. I’ve learned so much but probably the biggest lesson is to invest as much as you can and for that I’m so thankful.

Wife and I currently have 90% of our portfolio in VTSAX which is about $270,000. We also have about $30,000 in a Bitcoin fund. We choose GBTC as it’s our only option for our Roth. The only major concern is fees as you pay a premium when buying and a 2% fee which stinks

I do know that crypto is here to stay and the fact that Wall Street is buying it in huge amounts does give me confidence that it will out perform the market for the next 20 years. I also see it as a major inflation hedge. The large amount of cash that the US continues to print makes me nervous. I do see Bitcoin as the new “gold” and want to diversify a bit. I’m still strongly committed to VTSAX as 90% of our portfolio but want to add a bit more risk to capatilize on better returns. I don’t really see a huge difference in investing 10% in Bitcoin vs 10% in emerging markets.

My questions are as follows

1. Is using 10% of my portfolio to buy individual stocks, Bitcoin, etc a rediculous amount?

2. I see Bitcoin as a commodity with international flavor. Does this make any sense to use it as my international portion of my portfolio or am I way out of line here?
z3r0c00l
Posts: 1901
Joined: Fri Jul 06, 2012 11:43 am
Location: NYC
Contact:

Re: 90% VTSAX & 10% Bitcoin (GBTC)

Post by z3r0c00l »

bg5 wrote: Fri Nov 20, 2020 7:42 pm
I do know that crypto is here to stay
No you don't. I wouldn't gamble 10% of my money but I would say if you truly limit it to 10% that won't ruin your life ̶w̶h̶e̶n̶ if it goes to zero. Given reasonable odds, I would bet money that GBTC is going to zero this decade.
Bryzzo2016
Posts: 17
Joined: Thu Aug 31, 2017 11:15 pm

Re: 90% VTSAX & 10% Bitcoin (GBTC)

Post by Bryzzo2016 »

Nice timing, just learned about GBTC and got a little this week in fomo on next bitcoin runup. Now 99% vtsax, .5% GBTC, .5% TSLA :-)
000
Posts: 3351
Joined: Thu Jul 23, 2020 12:04 am

Re: 90% VTSAX & 10% Bitcoin (GBTC)

Post by 000 »

Are you sure that GBTC is even allowed in a Roth account? I would hate to find out years down the road that it was a prohibited transaction, which would count as a irrevocable distribution from the date of purchase.

Anyway, don't you think it's a little perverse that your stock diversifier would be something highly dependent on continued investor interest (relative to expectations) of investing in the internet, just like many of the top stocks in VTSAX?
User avatar
David Jay
Posts: 9637
Joined: Mon Mar 30, 2015 5:54 am
Location: Michigan

Re: 90% VTSAX & 10% Bitcoin (GBTC)

Post by David Jay »

2% annual fee, 'nuff said.
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius
roth evangelist
Posts: 30
Joined: Wed Jul 01, 2020 9:56 pm

Re: 90% VTSAX & 10% Bitcoin (GBTC)

Post by roth evangelist »

I think Bitcoin and other crypto currencies are probably a smart investment as long as they remains a modest part of your portfolio. I don't know what is the right AA of crypto in one's portfolio, but the hardcore bears seem to have an irrational fear of it. On the other hand, investing all or the majority of your money in something as new as crypto currency is foolish. I would think it's better to treat Bitcoin as closer to gold than stocks, meaning keep it at 10% or less.

All the hate toward Bitcoin seems to be directed to the day trading aspects to it, or its poor utility as a usable currency. If you're going to buy and hold it, I think that's the best crypto investing strategy there is.

Lots of big financial firms are investing in crypto. Square, Paypal/Venmo, Fidelity has a fund now, etc. It's only going to become more prominent in the future. I think the conventional wisdom on Bitcoin will probably change on this forum over the next few years.
NoRegret
Posts: 149
Joined: Sat Dec 16, 2017 2:00 am
Location: California

Re: 90% VTSAX & 10% Bitcoin (GBTC)

Post by NoRegret »

bg5 wrote: Fri Nov 20, 2020 7:42 pm This forum continues to be one of my best discoveries of my life. I’ve learned so much but probably the biggest lesson is to invest as much as you can and for that I’m so thankful.

Wife and I currently have 90% of our portfolio in VTSAX which is about $270,000. We also have about $30,000 in a Bitcoin fund. We choose GBTC as it’s our only option for our Roth. The only major concern is fees as you pay a premium when buying and a 2% fee which stinks

I do know that crypto is here to stay and the fact that Wall Street is buying it in huge amounts does give me confidence that it will out perform the market for the next 20 years. I also see it as a major inflation hedge. The large amount of cash that the US continues to print makes me nervous. I do see Bitcoin as the new “gold” and want to diversify a bit. I’m still strongly committed to VTSAX as 90% of our portfolio but want to add a bit more risk to capatilize on better returns. I don’t really see a huge difference in investing 10% in Bitcoin vs 10% in emerging markets.

My questions are as follows

1. Is using 10% of my portfolio to buy individual stocks, Bitcoin, etc a rediculous amount?

2. I see Bitcoin as a commodity with international flavor. Does this make any sense to use it as my international portion of my portfolio or am I way out of line here?
How long have you owned GBTC and do you understand the volatility associated with a 10% bitcoin position?

Microstrategy (MSTR) is becoming a proxy for BTC.
https://decrypt.co/46954/microstrategy- ... of-bitcoin

You need to understand different assets have different behaviors, what you know of stocks don't necessarily apply to other asset classes.
Market timer targeting long term cycles -- aiming for several key decisions per asset class per decade
z3r0c00l
Posts: 1901
Joined: Fri Jul 06, 2012 11:43 am
Location: NYC
Contact:

Re: 90% VTSAX & 10% Bitcoin (GBTC)

Post by z3r0c00l »

roth evangelist wrote: Fri Nov 20, 2020 8:07 pm
All the hate toward Bitcoin... or its poor utility as a usable currency.
What else is there? Isn't this supposed to be a usable currency?
User avatar
bluquark
Posts: 1184
Joined: Mon Oct 22, 2018 2:30 pm

Re: 90% VTSAX & 10% Bitcoin (GBTC)

Post by bluquark »

bg5 wrote: Fri Nov 20, 2020 7:42 pm I don’t really see a huge difference in investing 10% in Bitcoin vs 10% in emerging markets.
It seems quite different to me. If I look at the 30-year history of an arbitrarily chosen emerging markets fund: https://www.macrotrends.net/stocks/char ... ce-history, I notice the maximum drawdown over the period was about 50%. Bitcoin just recently had a drawdown of 80%.
1. Is using 10% of my portfolio to buy individual stocks, Bitcoin, etc a rediculous amount?
Well, I wouldn't go so far as to call your idea ridiculous as it stands. One thing to be careful about is that if Bitcoin's volatility continues at the same levels, the situation may *become* ridiculous over time, unless you have a good rebalancing plan.

Imagine Bitcoin drops by 80% again and you reload your portfolio back to the target 10%. Now there's a chance that you will lose up to 18% of your original portfolio. And you might even end up repeatedly throwing good money after bad. In other words, the risk over your lifetime is not necessarily limited to the 10% of portfolio you intend, depending on the rebalancing approach you use.

Conversely, if Bitcoin rises by 500% again, it might be wise to decide in advance when exactly you are going to collect your winnings and drop it back to 10% instead of winding up uncomfortably HODLing 50% of your newly-large portfolio.
Wall Street is buying it in huge amounts
Depends what standards you're using for "huge". The total value of Bitcoin (~$350 billion) is now in the same ballpark as the total value of convertible bonds. Vanguard recently discontinued their convertible bond mutual fund in part because the asset class was too small to be worth the trouble.
70/30 portfolio | Equity: global market weight | Bonds: 20% long-term munis - 10% LEMB
Ferdinand2014
Posts: 1753
Joined: Mon Dec 17, 2018 6:49 pm

Re: 90% VTSAX & 10% Bitcoin (GBTC)

Post by Ferdinand2014 »

If you are this confident in Bitcoin why only 10%?
“You only find out who is swimming naked when the tide goes out.“ — Warren Buffett
roth evangelist
Posts: 30
Joined: Wed Jul 01, 2020 9:56 pm

Re: 90% VTSAX & 10% Bitcoin (GBTC)

Post by roth evangelist »

z3r0c00l wrote: Fri Nov 20, 2020 8:33 pm
roth evangelist wrote: Fri Nov 20, 2020 8:07 pm
All the hate toward Bitcoin... or its poor utility as a usable currency.
What else is there? Isn't this supposed to be a usable currency?
I don't think so. I mean, at first, yes. But I think we've seen over the past few years that it's more of a store of value than a currency. I think that's part of the reason why it generates so much controversy. Gold has also been used as a currency in the past, but we don't think of it that way anymore because it's only practical as a store of value.
magicrat
Posts: 1091
Joined: Sat Nov 29, 2014 7:04 pm

Re: 90% VTSAX & 10% Bitcoin (GBTC)

Post by magicrat »

roth evangelist wrote: Fri Nov 20, 2020 9:12 pm
z3r0c00l wrote: Fri Nov 20, 2020 8:33 pm
roth evangelist wrote: Fri Nov 20, 2020 8:07 pm
All the hate toward Bitcoin... or its poor utility as a usable currency.
What else is there? Isn't this supposed to be a usable currency?
I don't think so. I mean, at first, yes. But I think we've seen over the past few years that it's more of a store of value than a currency. I think that's part of the reason why it generates so much controversy. Gold has also been used as a currency in the past, but we don't think of it that way anymore because it's only practical as a store of value.
Looks like its value has fluctuated quite a bit over the last few years. How exactly is it a store of value?
bogivan
Posts: 77
Joined: Sun Oct 08, 2017 8:17 am

Re: 90% VTSAX & 10% Bitcoin (GBTC)

Post by bogivan »

bg5 wrote: Fri Nov 20, 2020 7:42 pm 1. Is using 10% of my portfolio to buy individual stocks, Bitcoin, etc a rediculous amount?
No, not a ridiculous amount if you've carefully evaluated what you're getting into and understand the risks involved. If Bitcoin continues to help usher in a new digital financial world, having some BTC growing tax-free within a Roth account could have been a very financially beneficial decision. Many people cannot deal with the stress of a more volatile asset like BTC, though, so make sure you're OK with a more aggressive portfolio.

2 things:

1. Make sure you have a solid re-balancing plan and stick to it. Having an asset rapidly increasing and decreasing in value can make it more challenging psychologically to sell/hold when going up and buy/hold when it's going down. Have a plan and dispassionately execute it.

2. Besides the risks inherent with BTC itself, make sure you understand GBTC specifically. It is not 1:1 BTC tracking and once a "real" ETF gets approved there is a distinct chance that GBTC loses its current premium to BTC price and could even start trading below BTC price. As more options for BTC exposure become available at lower fees, you might want to jump as well if GBTC doesn't reduce their fees to stay competitive (though, they likely will).
bg5 wrote: Fri Nov 20, 2020 7:42 pm 2. I see Bitcoin as a commodity with international flavor. Does this make any sense to use it as my international portion of my portfolio or am I way out of line here?
No, I wouldn't have the international aspects of Bitcoin factor into my domestic/international stock/bond portfolio decisions.
000 wrote: Fri Nov 20, 2020 7:52 pm Are you sure that GBTC is even allowed in a Roth account? I would hate to find out years down the road that it was a prohibited transaction, which would count as a irrevocable distribution from the date of purchase.
Why would it not be allowed? Even before GBTC existed, people were buying BTC directly with self-directed IRAs. Having a regulated security in your brokerage would be even less questionable. The only "prohibited transactions" that currently exist for IRAs have to do with self-dealing behaviors.
Last edited by bogivan on Fri Nov 20, 2020 9:31 pm, edited 2 times in total.
000
Posts: 3351
Joined: Thu Jul 23, 2020 12:04 am

Re: 90% VTSAX & 10% Bitcoin (GBTC)

Post by 000 »

bogivan wrote: Fri Nov 20, 2020 9:24 pm
000 wrote: Fri Nov 20, 2020 7:52 pm Are you sure that GBTC is even allowed in a Roth account? I would hate to find out years down the road that it was a prohibited transaction, which would count as a irrevocable distribution from the date of purchase.
Why would it not be allowed? Even before GBTC existed, people were buying BTC directly with self-directed IRAs. Having a regulated security in your brokerage would be even less questionable. The only "prohibited transactions" that currently exist for IRAs have to do with self-dealing behaviors.
It depends on what GBTC actually "is".

Collectibles, for example, are generally prohibited in IRAs.
columbia
Posts: 3001
Joined: Tue Aug 27, 2013 5:30 am

Re: 90% VTSAX & 10% Bitcoin (GBTC)

Post by columbia »

000 wrote: Fri Nov 20, 2020 9:30 pm
bogivan wrote: Fri Nov 20, 2020 9:24 pm
000 wrote: Fri Nov 20, 2020 7:52 pm Are you sure that GBTC is even allowed in a Roth account? I would hate to find out years down the road that it was a prohibited transaction, which would count as a irrevocable distribution from the date of purchase.
Why would it not be allowed? Even before GBTC existed, people were buying BTC directly with self-directed IRAs. Having a regulated security in your brokerage would be even less questionable. The only "prohibited transactions" that currently exist for IRAs have to do with self-dealing behaviors.
It depends on what GBTC actually "is".

Collectibles, for example, are generally prohibited in IRAs.
Gold is taxed as a collectible, but you can still buy it in an IRA.
bogivan
Posts: 77
Joined: Sun Oct 08, 2017 8:17 am

Re: 90% VTSAX & 10% Bitcoin (GBTC)

Post by bogivan »

000 wrote: Fri Nov 20, 2020 9:30 pm
bogivan wrote: Fri Nov 20, 2020 9:24 pm Why would it not be allowed? Even before GBTC existed, people were buying BTC directly with self-directed IRAs. Having a regulated security in your brokerage would be even less questionable. The only "prohibited transactions" that currently exist for IRAs have to do with self-dealing behaviors.
It depends on what GBTC actually "is".

Collectibles, for example, are generally prohibited in IRAs.
There are a number of businesses that specifically help you set up Bitcoin IRAs, so it they - and their 10,000s (100,000s?) of customers - would be in a lot of trouble: https://retirementinvestments.com/bitco ... companies/ The number of people holding GBTC in regular brokerage IRAs is likely an even larger number.

Regulators argue whether BTC is a commodity, security, or currency within the law, but I don't think anyone argues it should be considered collectible.
Last edited by bogivan on Fri Nov 20, 2020 9:44 pm, edited 1 time in total.
000
Posts: 3351
Joined: Thu Jul 23, 2020 12:04 am

Re: 90% VTSAX & 10% Bitcoin (GBTC)

Post by 000 »

columbia wrote: Fri Nov 20, 2020 9:36 pm
000 wrote: Fri Nov 20, 2020 9:30 pm
bogivan wrote: Fri Nov 20, 2020 9:24 pm
000 wrote: Fri Nov 20, 2020 7:52 pm Are you sure that GBTC is even allowed in a Roth account? I would hate to find out years down the road that it was a prohibited transaction, which would count as a irrevocable distribution from the date of purchase.
Why would it not be allowed? Even before GBTC existed, people were buying BTC directly with self-directed IRAs. Having a regulated security in your brokerage would be even less questionable. The only "prohibited transactions" that currently exist for IRAs have to do with self-dealing behaviors.
It depends on what GBTC actually "is".

Collectibles, for example, are generally prohibited in IRAs.
Gold is taxed as a collectible, but you can still buy it in an IRA.
Depends on the kind of Gold.
000
Posts: 3351
Joined: Thu Jul 23, 2020 12:04 am

Re: 90% VTSAX & 10% Bitcoin (GBTC)

Post by 000 »

bogivan wrote: Fri Nov 20, 2020 9:41 pm There are a number of businesses that specifically help you set up Bitcoin IRAs, so it they - and their 10,000s (100,000s?) of customers - would be in a lot of trouble
I don't think bitcoin IRA marketers are a good source of legal information.
sambb
Posts: 2960
Joined: Sun Mar 10, 2013 3:31 pm

Re: 90% VTSAX & 10% Bitcoin (GBTC)

Post by sambb »

good luck, it is a diversification!
Hustlinghustling
Posts: 176
Joined: Mon Jul 25, 2016 12:09 am

Re: 90% VTSAX & 10% Bitcoin (GBTC)

Post by Hustlinghustling »

Ferdinand2014 wrote: Fri Nov 20, 2020 9:01 pm If you are this confident in Bitcoin why only 10%?
are you equally all or nothing for everything else you have confidence in? such an odd standard to hold. most here are confident in equities in longrun. most here are not 100% equities. gasp! where’s the conviction??
Topic Author
bg5
Posts: 193
Joined: Mon Jan 15, 2018 11:07 am

Re: 90% VTSAX & 10% Bitcoin (GBTC)

Post by bg5 »

I feel comfortable with the risk and I do understand the wild ride I’m signing up for. My biggest concern is the 2% fee which totally irritates me but I want access to Bitcoin through my Roth and I feel this is my best option.

10% allows me to have enough skin in the game to make it worth while if I see massive gains. I have 20-30 years so I’m lucky enough to have that much time on my side.

Much of my retirement will be left for my kids so if it fails it’s not the end of the world

I’ve driven beater cars all my life, lived well below my means and have never tried to keep up with the Jones. So my $30,000 investment is like most people buying a car and watching the value drop significantly.

Investing has become my hobby and like all hobbies ya sometimes have to spend cash to enjoy yourself. I think of this initial invest as “fun money” with a great opportunity to see my cash grow 10x over the next 10-15 years.

Maybe it will go to zero but at the end of the day it’s no different than someone buying a new car and watching it depreciate drastically over the years

I don’t think anyone is wrong for calling me an idiot 😎. Time will tell if I made the right call or not and luckily this $30,000 won’t break me or my kids inheritance if it goes to zero.

Best of luck to everyone
Hustlinghustling
Posts: 176
Joined: Mon Jul 25, 2016 12:09 am

Re: 90% VTSAX & 10% Bitcoin (GBTC)

Post by Hustlinghustling »

magicrat wrote: Fri Nov 20, 2020 9:19 pm
roth evangelist wrote: Fri Nov 20, 2020 9:12 pm
z3r0c00l wrote: Fri Nov 20, 2020 8:33 pm
roth evangelist wrote: Fri Nov 20, 2020 8:07 pm
All the hate toward Bitcoin... or its poor utility as a usable currency.
What else is there? Isn't this supposed to be a usable currency?
I don't think so. I mean, at first, yes. But I think we've seen over the past few years that it's more of a store of value than a currency. I think that's part of the reason why it generates so much controversy. Gold has also been used as a currency in the past, but we don't think of it that way anymore because it's only practical as a store of value.
Looks like its value has fluctuated quite a bit over the last few years. How exactly is it a store of value?
easily transferable store of value outside of government oversight is a large driver for many other parts of the world
oldfort
Posts: 1930
Joined: Mon Mar 02, 2020 8:45 pm

Re: 90% VTSAX & 10% Bitcoin (GBTC)

Post by oldfort »

There is a common argument if a fund or ETF is worth investing in at all, it should be a minimum of 10% of your portfolio. Anything less is making your portfolio needlessly complicated with too many funds and anything less than 5% is too small to move the needle on your overall performance. I wouldn't touch crypto-currencies with a 10ft. pole, and arguments over bitcoin have been aired extensively in other threads: risk of quantum computing, risk of government regulation, risk of being supplanted by other crypto-currencies, and nearly negligible use as a medium of exchange. If you're brave enough to enter the space, there is some logic to making crypto in the 5-10% range.
ny_rn
Posts: 478
Joined: Sun May 11, 2014 7:09 am

Re: 90% VTSAX & 10% Bitcoin (GBTC)

Post by ny_rn »

Why not just buy Bitcoin via Coinbase and have control over it? You can spend or liquidate at any time.
Topic Author
bg5
Posts: 193
Joined: Mon Jan 15, 2018 11:07 am

Re: 90% VTSAX & 10% Bitcoin (GBTC)

Post by bg5 »

My biggest fear is losing the codes, or it getting hacked. Pretty easy just to buy it on vanguard and move on. But it’s a huge premium you pay
core4portfolio
Posts: 577
Joined: Thu Dec 26, 2013 2:12 pm

Re: 90% VTSAX & 10% Bitcoin (GBTC)

Post by core4portfolio »

2 years back, I burned once by GBTC and never into that. I invested only 1250 dollars and took 250 loss.
Allocation : 80/20 (80% TSM, 20% TBM) | Need to learn fishing sooner
User avatar
HomerJ
Posts: 15351
Joined: Fri Jun 06, 2008 12:50 pm

Re: 90% VTSAX & 10% Bitcoin (GBTC)

Post by HomerJ »

bg5 wrote: Fri Nov 20, 2020 7:42 pmI do know that crypto is here to stay
(1) You don't know that
(2) Even if true, Bitcoin may not be the winner.

This is like someone in 1895 saying "Automobiles are here to stay, so I will invest 10% of my money in Duryea Motor Wagon Company"

But then Ford came along in 1903.

Or like someone in 1990s saying "Internet is here to stay, so I will invest 10% of my money in Alta Vista or MySpace or pets.com"

Blockchain and even crypto may be here to stay, but betting that Bitcoin will be the winner is gambling.

It may pay off, it may not, but your original premise "crypto is good", even if true, does not mean Bitcoin will be a great investment.

But maybe it will. Go ahead. Gamble $30,000. What would your spouse say if you took $30,000 to Vegas?
A Goldman Sachs associate provided a variety of detailed explanations, but then offered a caveat, “If I’m being dead-### honest, though, nobody knows what’s really going on.”
Ferdinand2014
Posts: 1753
Joined: Mon Dec 17, 2018 6:49 pm

Re: 90% VTSAX & 10% Bitcoin (GBTC)

Post by Ferdinand2014 »

Hustlinghustling wrote: Fri Nov 20, 2020 9:58 pm
Ferdinand2014 wrote: Fri Nov 20, 2020 9:01 pm If you are this confident in Bitcoin why only 10%?
are you equally all or nothing for everything else you have confidence in? such an odd standard to hold. most here are confident in equities in longrun. most here are not 100% equities. gasp! where’s the conviction??

There is a difference between conviction and need. It’s clear you cannot use Bitcoin for short term needs like buying a car this week. I keep about 5% cash and the rest in equities. The only reason I keep cash is because of short term needs. The only conviction I have in cash is that it is not volatile and I can reliably use it for short term needs. I have no conviction in the long term prospects of cash. If the op - as he states - feels confident in the future of Bitcoin, why only 10%. Conversely, if one states they have a conviction in the long term future of equities, then states they are invested in 10% equities, it would seem contradictory. Op is not 100% Bitcoin. Not 50%. Or 25%. Op is 10%. That tells me op does not have conviction.
“You only find out who is swimming naked when the tide goes out.“ — Warren Buffett
luckyducky99
Posts: 158
Joined: Sun Dec 15, 2019 7:47 pm

Re: 90% VTSAX & 10% Bitcoin (GBTC)

Post by luckyducky99 »

bg5 wrote: Fri Nov 20, 2020 7:42 pm 1. Is using 10% of my portfolio to buy individual stocks, Bitcoin, etc a rediculous amount?
Most people recommend limiting speculative / "fun" money to 5% of the portfolio. I don't think 10% is ridiculous. Are you planning to buy more, or just let whatever you buy now ride? I think maintaining a constant 10% by adding contributions or rebalancing into it if it falls would be more reckless than I would be, but if you're planning to buy a chunk now and let it ride, ok, good luck. At best, it's speculation in an unproven currency.
bg5 wrote: Fri Nov 20, 2020 7:42 pm 2. I see Bitcoin as a commodity with international flavor. Does this make any sense to use it as my international portion of my portfolio or am I way out of line here?
I think this is not a good way of thinking of it. International is recommended to diversify because US and non-US markets have less than perfect correlation, so if international markets do better but US markets lag, you get some benefit from holding international. I can think of no reason why bitcoin would track international markets closer than US markets, so that diversification benefit just isn't there.
tiburblium
Posts: 133
Joined: Thu Apr 11, 2019 4:28 pm

Re: 90% VTSAX & 10% Bitcoin (GBTC)

Post by tiburblium »

bg5 wrote: Fri Nov 20, 2020 10:44 pm My biggest fear is losing the codes, or it getting hacked. Pretty easy just to buy it on vanguard and move on. But it’s a huge premium you pay
With Coinbase, they are facilitating the transactions and they hold the keys, you would just create an account, transfer funds, and buy.

Also, why the bet on bitcoin vs the countless other tokens out there? Or other collectables like beanie babies or pokemon cards?

Is this $30,000 bet on bitcoin something you decided to do recently? If so, respectfully, I would slow down
bogivan
Posts: 77
Joined: Sun Oct 08, 2017 8:17 am

Re: 90% VTSAX & 10% Bitcoin (GBTC)

Post by bogivan »

ny_rn wrote: Fri Nov 20, 2020 10:38 pm Why not just buy Bitcoin via Coinbase and have control over it? You can spend or liquidate at any time.
Holding GBTC in a Roth account makes the potentially large capital gains from BTC tax-free without having to set up a self-directed IRA.
David Jay wrote: Fri Nov 20, 2020 7:58 pm 2% annual fee, 'nuff said.
A 2% fee is harsh if you're expecting 7% average yearly returns from a Total Market fund, but 2% is much less of a drag on your returns when GBTC is up by 159% YTD.
User avatar
calvin+hobbes
Posts: 175
Joined: Thu Jan 16, 2020 9:37 pm

Re: 90% VTSAX & 10% Bitcoin (GBTC)

Post by calvin+hobbes »

bg5 wrote: Fri Nov 20, 2020 10:01 pm I feel comfortable with the risk and I do understand the wild ride I’m signing up for. My biggest concern is the 2% fee which totally irritates me but I want access to Bitcoin through my Roth and I feel this is my best option.

10% allows me to have enough skin in the game to make it worth while if I see massive gains. I have 20-30 years so I’m lucky enough to have that much time on my side.

Much of my retirement will be left for my kids so if it fails it’s not the end of the world

I’ve driven beater cars all my life, lived well below my means and have never tried to keep up with the Jones. So my $30,000 investment is like most people buying a car and watching the value drop significantly.

Investing has become my hobby and like all hobbies ya sometimes have to spend cash to enjoy yourself. I think of this initial invest as “fun money” with a great opportunity to see my cash grow 10x over the next 10-15 years.

Maybe it will go to zero but at the end of the day it’s no different than someone buying a new car and watching it depreciate drastically over the years

I don’t think anyone is wrong for calling me an idiot 😎. Time will tell if I made the right call or not and luckily this $30,000 won’t break me or my kids inheritance if it goes to zero.

Best of luck to everyone
Sounds like you’ve already made up your mind and are at peace with it. That’s fine but why bother posting here if there’s nothing actionable?
rascott
Posts: 2383
Joined: Wed Apr 15, 2015 10:53 am

Re: 90% VTSAX & 10% Bitcoin (GBTC)

Post by rascott »

10% in BTC is pretty bold. I started buying some when Coinbase came on line, but never tossed more than true play money into it. Yeah, it's up 10-20x+ since I started, but what do I know. Only put in what you are ok with going to zero.
nocebo
Posts: 25
Joined: Tue Jan 21, 2020 8:39 pm

Re: 90% VTSAX & 10% Bitcoin (GBTC)

Post by nocebo »

It was my once in a lifetime buy.... now I'm just investing in stocks/bonds. Never sold a single bitcoin, even though it went from 3.5% of my portfolio to 50%.

So why don't I buy more? Had to diversify my portfolio. It took many years for my stocks/bonds to catch up to BTC.

It's an easy choice for a 20-30 year time horizon. That portfolio is going to look real nice in the end. 10% if fine, not crazy at all. It serves so many purposes, you could probably argue it's international exposure as well.

Only advice is to learn how to store your bitcoin in a cold wallet. Super simple, lots of guides out there. Learn that, buy some bitcoin, and jump down the rabbit hole
Samosa22
Posts: 129
Joined: Tue Dec 31, 2019 10:51 am

Re: 90% VTSAX & 10% Bitcoin (GBTC)

Post by Samosa22 »

Ferdinand2014 wrote: Fri Nov 20, 2020 11:04 pm
Hustlinghustling wrote: Fri Nov 20, 2020 9:58 pm
Ferdinand2014 wrote: Fri Nov 20, 2020 9:01 pm If you are this confident in Bitcoin why only 10%?
are you equally all or nothing for everything else you have confidence in? such an odd standard to hold. most here are confident in equities in longrun. most here are not 100% equities. gasp! where’s the conviction??

There is a difference between conviction and need. It’s clear you cannot use Bitcoin for short term needs like buying a car this week. I keep about 5% cash and the rest in equities. The only reason I keep cash is because of short term needs. The only conviction I have in cash is that it is not volatile and I can reliably use it for short term needs. I have no conviction in the long term prospects of cash. If the op - as he states - feels confident in the future of Bitcoin, why only 10%. Conversely, if one states they have a conviction in the long term future of equities, then states they are invested in 10% equities, it would seem contradictory. Op is not 100% Bitcoin. Not 50%. Or 25%. Op is 10%. That tells me op does not have conviction.
Having a 3 or 2 fund portfolio is recommended here all the time and asset allocations ranging from 90/10 to 20/80 are fine. But if OP decides to put 10% of their portfolio in an investment that is't popular here then OP isn't confident enough in the future of that investment.
"The chains of habit are too light to be felt until they are too heavy to be broken". BR
Hustlinghustling
Posts: 176
Joined: Mon Jul 25, 2016 12:09 am

Re: 90% VTSAX & 10% Bitcoin (GBTC)

Post by Hustlinghustling »

Ferdinand2014 wrote: Fri Nov 20, 2020 11:04 pm
Hustlinghustling wrote: Fri Nov 20, 2020 9:58 pm
Ferdinand2014 wrote: Fri Nov 20, 2020 9:01 pm If you are this confident in Bitcoin why only 10%?
are you equally all or nothing for everything else you have confidence in? such an odd standard to hold. most here are confident in equities in longrun. most here are not 100% equities. gasp! where’s the conviction??

There is a difference between conviction and need. It’s clear you cannot use Bitcoin for short term needs like buying a car this week. I keep about 5% cash and the rest in equities. The only reason I keep cash is because of short term needs. The only conviction I have in cash is that it is not volatile and I can reliably use it for short term needs. I have no conviction in the long term prospects of cash. If the op - as he states - feels confident in the future of Bitcoin, why only 10%. Conversely, if one states they have a conviction in the long term future of equities, then states they are invested in 10% equities, it would seem contradictory. Op is not 100% Bitcoin. Not 50%. Or 25%. Op is 10%. That tells me op does not have conviction.
The line is arbitrary. if he was 50%, then why not 75%? if 75%, then why not 95? etc.
And as others have pointed out, many say to hold at least 10% in anything for it to be a meaningful stake.
The binary approach and lack of gradient in many topics here seems very odd to "call out" someone with. Why does he need to have conviction where he has to bet the farm to convince you? Why can't someone believe in an industry but still be cautious and prudent enough to acknowledge that, yes, it still may not work out as I predict/hope it would so don't want to go all in? That seems sensible and otherwise would border on being reckless and irrational
Last edited by Hustlinghustling on Sat Nov 21, 2020 2:14 am, edited 1 time in total.
Hustlinghustling
Posts: 176
Joined: Mon Jul 25, 2016 12:09 am

Re: 90% VTSAX & 10% Bitcoin (GBTC)

Post by Hustlinghustling »

bogivan wrote: Fri Nov 20, 2020 11:47 pm
A 2% fee is harsh if you're expecting 7% average yearly returns from a Total Market fund, but 2% is much less of a drag on your returns when GBTC is up by 159% YTD.
Also the 2% fee includes all the manual hassle you would otherwise have owning Bitcoin directly and managing it's storage.
Topic Author
bg5
Posts: 193
Joined: Mon Jan 15, 2018 11:07 am

Re: 90% VTSAX & 10% Bitcoin (GBTC)

Post by bg5 »

I plan to just let the $30k ride and see what happens. I don’t plan to rebalance so things could get goofy. With that being said we do invest $40k annually into VTSAX with a combination of Roth, 403b and 457b. Future contributions will go all into VTSAX.

There is no doubt this is a gamble but it’s not a huge chunk of cash. It’s not chump change either. The entire stock market is also a gamble but not near as risky as my bet.

I just feel we are in the 1st inning of a baseball game and I want some crypto exposure to my portfolio.

I see it as an inflation hedge. It’s def Risky but with risk comes opportunities for high rewards. I have a feeling we will be at 40k within 3 years but with who knows. I feel comfortable wagering 10% of my portfolio but know more. Time will tell
User avatar
camillus
Posts: 730
Joined: Thu Feb 28, 2013 9:55 pm

Re: 90% VTSAX & 10% Bitcoin (GBTC)

Post by camillus »

bg5 wrote: Fri Nov 20, 2020 7:42 pmWall Street is buying it in huge amounts
If this is true, then you (and I) already have exposure to bitcoin in VTSAX.

Good luck.
Ferdinand2014
Posts: 1753
Joined: Mon Dec 17, 2018 6:49 pm

Re: 90% VTSAX & 10% Bitcoin (GBTC)

Post by Ferdinand2014 »

Hustlinghustling wrote: Sat Nov 21, 2020 2:08 am
Ferdinand2014 wrote: Fri Nov 20, 2020 11:04 pm
Hustlinghustling wrote: Fri Nov 20, 2020 9:58 pm
Ferdinand2014 wrote: Fri Nov 20, 2020 9:01 pm If you are this confident in Bitcoin why only 10%?
are you equally all or nothing for everything else you have confidence in? such an odd standard to hold. most here are confident in equities in longrun. most here are not 100% equities. gasp! where’s the conviction??

There is a difference between conviction and need. It’s clear you cannot use Bitcoin for short term needs like buying a car this week. I keep about 5% cash and the rest in equities. The only reason I keep cash is because of short term needs. The only conviction I have in cash is that it is not volatile and I can reliably use it for short term needs. I have no conviction in the long term prospects of cash. If the op - as he states - feels confident in the future of Bitcoin, why only 10%. Conversely, if one states they have a conviction in the long term future of equities, then states they are invested in 10% equities, it would seem contradictory. Op is not 100% Bitcoin. Not 50%. Or 25%. Op is 10%. That tells me op does not have conviction.
The line is arbitrary. if he was 50%, then why not 75%? if 75%, then why not 95? etc.
And as others have pointed out, many say to hold at least 10% in anything for it to be a meaningful stake.
The binary approach and lack of gradient in many topics here seems very odd to "call out" someone with. Why does he need to have conviction where he has to bet the farm to convince you? Why can't someone believe in an industry but still be cautious and prudent enough to acknowledge that, yes, it still may not work out as I predict/hope it would so don't want to go all in? That seems sensible and otherwise would border on being reckless and irrational

He doesn’t need to convince me of anything. It is not my hard earned money, I posed a question in order for the OP to think through his plan and make sure this is what he wants. When I propose something at my company, I hope and expect my employees to ‘call me out’ to make sure we get it right and think through the possible issues. The OP stated that Bitcoin is here to stay and that it will outperform the market over the next 20 years.
“You only find out who is swimming naked when the tide goes out.“ — Warren Buffett
Anon9001
Posts: 747
Joined: Fri Dec 20, 2019 9:28 am
Location: भारत

Re: 90% VTSAX & 10% Bitcoin (GBTC)

Post by Anon9001 »

For all the hatred BItcoin gets here it out-performed the international stocks,Gold while having low correlation to Equities. Realistically it is still not well known to many people outside the Western World and the market cap is much lower than Gold while being more useful than Gold in that in some failed states it is actually used as a currency. I also like the extreme volatility that it has in that enables very low percentage exposure like 10% and still able to give meaningful diversification. I would say put money into it but make sure not too get very stressed when it drops 80%. If you are not comfortable with that lower the allocation to 5%.
z3r0c00l
Posts: 1901
Joined: Fri Jul 06, 2012 11:43 am
Location: NYC
Contact:

Re: 90% VTSAX & 10% Bitcoin (GBTC)

Post by z3r0c00l »

Hustlinghustling wrote: Fri Nov 20, 2020 10:02 pm
easily transferable store of value outside of government oversight is a large driver for many other parts of the world
I would agree that this is the primary appeal as a currency, it is ideal for crime where electronic transfers are needed. In this scenario (such as selling drugs on the internet) it can replace the classic king of crime which has been the $100 bill. I consider this also a major liability. Not only are you doing business with criminals who are as likely to steal bitcoins as anything (which has happened many times already), but you are a target to governments that can, at a whim, destroy bitcoin by outlawing it.
Last edited by z3r0c00l on Sat Nov 21, 2020 9:36 am, edited 1 time in total.
User avatar
ohboy!
Posts: 324
Joined: Thu Jan 04, 2018 2:21 pm

Re: 90% VTSAX & 10% Bitcoin (GBTC)

Post by ohboy! »

Anon9001 wrote: Sat Nov 21, 2020 9:02 am For all the hatred BItcoin gets here it out-performed the international stocks,Gold while having low correlation to Equities. Realistically it is still not well known to many people outside the Western World and the market cap is much lower than Gold while being more useful than Gold in that in some failed states it is actually used as a currency. I also like the extreme volatility that it has in that enables very low percentage exposure like 10% and still able to give meaningful diversification. I would say put money into it but make sure not too get very stressed when it drops 80%. If you are not comfortable with that lower the allocation to 5%.
Not known to people outside the western world? The majority of mining is in China.

If this is the first inning of crypto I and plenty of others already have hit homeruns. I purchased some Ethereum for $7 that I sold within a year for $1200. I have a few BTC purchased for $800. Now worth over $18k.

I like a 10% allocation. I don’t rebalance it because I have sold enough to cover my cost basis and then some. At the beginning of this year my allocation was around 10% but with gains I’m above 20% now. Looking for it to be lifechanging to motivate me to sell now. That’s probably bitcoin over $100k or Ethereum over $3k. Both of which I think are more likely than not. Perhaps even within a year. And if it goes to zero I won’t be too upset.

I do not like grayscale.
User avatar
abuss368
Posts: 22232
Joined: Mon Aug 03, 2009 2:33 pm
Location: Where the water is warm, the drinks are cold, and I don't know the names of the players!
Contact:

Re: 90% VTSAX & 10% Bitcoin (GBTC)

Post by abuss368 »

Ferdinand2014 wrote: Fri Nov 20, 2020 9:01 pm If you are this confident in Bitcoin why only 10%?
Excellent way to look at things. I can’t look at Bitcoin as anything other than speculation. There are no earnings and thus no intrinsic value.
John C. Bogle: “Simplicity is the master key to financial success."
User avatar
ohboy!
Posts: 324
Joined: Thu Jan 04, 2018 2:21 pm

Re: 90% VTSAX & 10% Bitcoin (GBTC)

Post by ohboy! »

abuss368 wrote: Sat Nov 21, 2020 11:11 am
Ferdinand2014 wrote: Fri Nov 20, 2020 9:01 pm If you are this confident in Bitcoin why only 10%?
Excellent way to look at things. I can’t look at Bitcoin as anything other than speculation. There are no earnings and thus no intrinsic value.
Doubt you are interested but this is a good recent article on Bitcoin:
https://www.google.com/amp/s/www.coinde ... %3Famp%3D1

The beginning of it details some of the values of Bitcoin compared to assets as you know them
Topic Author
bg5
Posts: 193
Joined: Mon Jan 15, 2018 11:07 am

Re: 90% VTSAX & 10% Bitcoin (GBTC)

Post by bg5 »

The more I think about this I Will continue to hold about $15k in Roth for tax purposes.

But I am now leaning towards owning the other portion in real Bitcoin. That way I actually am in control of 1 full btc.
User avatar
abuss368
Posts: 22232
Joined: Mon Aug 03, 2009 2:33 pm
Location: Where the water is warm, the drinks are cold, and I don't know the names of the players!
Contact:

Re: 90% VTSAX & 10% Bitcoin (GBTC)

Post by abuss368 »

ohboy! wrote: Sat Nov 21, 2020 11:15 am
abuss368 wrote: Sat Nov 21, 2020 11:11 am
Ferdinand2014 wrote: Fri Nov 20, 2020 9:01 pm If you are this confident in Bitcoin why only 10%?
Excellent way to look at things. I can’t look at Bitcoin as anything other than speculation. There are no earnings and thus no intrinsic value.
Doubt you are interested but this is a good recent article on Bitcoin:
https://www.google.com/amp/s/www.coinde ... %3Famp%3D1

The beginning of it details some of the values of Bitcoin compared to assets as you know them
Thanks for sharing.
John C. Bogle: “Simplicity is the master key to financial success."
oldfort
Posts: 1930
Joined: Mon Mar 02, 2020 8:45 pm

Re: 90% VTSAX & 10% Bitcoin (GBTC)

Post by oldfort »

ohboy! wrote: Sat Nov 21, 2020 11:15 am
abuss368 wrote: Sat Nov 21, 2020 11:11 am
Ferdinand2014 wrote: Fri Nov 20, 2020 9:01 pm If you are this confident in Bitcoin why only 10%?
Excellent way to look at things. I can’t look at Bitcoin as anything other than speculation. There are no earnings and thus no intrinsic value.
Doubt you are interested but this is a good recent article on Bitcoin:
https://www.google.com/amp/s/www.coinde ... %3Famp%3D1

The beginning of it details some of the values of Bitcoin compared to assets as you know them
When you read comments like this in the article: it's clear you don't have to dig too deep to find Bitcoin proponents with fringe theories on monetary policy and opposition to the Federal Reserve.
we are reminded how easily our economy could be flooded with new money printed out of thin air; $3 trillion in new money was created in just three months in the United States, about 14% of U.S. GDP in 2019. The U.S. was not alone.
Last edited by oldfort on Sat Nov 21, 2020 4:54 pm, edited 1 time in total.
langlands
Posts: 614
Joined: Wed Apr 03, 2019 10:05 pm

Re: 90% VTSAX & 10% Bitcoin (GBTC)

Post by langlands »

bg5 wrote: Fri Nov 20, 2020 10:01 pm I feel comfortable with the risk and I do understand the wild ride I’m signing up for. My biggest concern is the 2% fee which totally irritates me but I want access to Bitcoin through my Roth and I feel this is my best option.

10% allows me to have enough skin in the game to make it worth while if I see massive gains. I have 20-30 years so I’m lucky enough to have that much time on my side.

Much of my retirement will be left for my kids so if it fails it’s not the end of the world

I’ve driven beater cars all my life, lived well below my means and have never tried to keep up with the Jones. So my $30,000 investment is like most people buying a car and watching the value drop significantly.

Investing has become my hobby and like all hobbies ya sometimes have to spend cash to enjoy yourself. I think of this initial invest as “fun money” with a great opportunity to see my cash grow 10x over the next 10-15 years.

Maybe it will go to zero but at the end of the day it’s no different than someone buying a new car and watching it depreciate drastically over the years

I don’t think anyone is wrong for calling me an idiot 😎. Time will tell if I made the right call or not and luckily this $30,000 won’t break me or my kids inheritance if it goes to zero.

Best of luck to everyone
I own a nominal amount of GBTC in my Roth. The 2% fee is pretty annoying but I think of it as a 1% expense ratio for a fairly exotic fund plus a 1% maintenance fee for taking care of all the wallet/cold storage/code security that I'd rather not deal with myself.

I will note that $30,000 is getting pretty close to the minimum amount required to put in a private placement order with Grayscale if you're an accredited investor (I believe the minimum is $50,000). These private placements occur regularly, last one in January I think: https://www.globenewswire.com/news-rele ... ement.html

The benefit is that you can can buy at the actual price of bitcoin instead of the 10-20% premium. You have to hold onto the GBTC shares you acquire through private placement for at least 6 months.
chipperd
Posts: 812
Joined: Sat Sep 24, 2011 5:58 am

Re: 90% VTSAX & 10% Bitcoin (GBTC)

Post by chipperd »

bg5 wrote: Fri Nov 20, 2020 10:01 pm "So my $30,000 investment is like most people buying a car and watching the value drop significantly."

I disagree with this apples to oranges comparison.
A car is a tool to carry you and your family places safely and to bring you to a job where you can make more than the tool costs. This is why many are comfortable with the depreciation rate a new car brings (not me, but some are).
That said, if you think that taking $30k and watching the value drop significantly is a wise investment, you'll be taken for a "ride" many times over.
That, coupled with the 2% annual fee, seems like you might want to reconsider this investment, and your mindset.
"A portfolio is like a bar of soap, the more it's handled, the less there is." Dr. William Bernstein
Post Reply