With the best yield in the traditional financial world generally at a paltry 5%, investors cannot keep their heads above water. Is crypto a better bet for the next couple of years?
Traditional advice
For decades the mantra from financial advisors was a “60/40 portfolio” made up of 60% equities and 40% bonds. This may have been fine for times gone by, but taking into account the world we currently live in, this is anything but fine.
The decades-long bond market that stretched from the early 80s until 2020 is very probably over, with that trend line looking to be well and truly broken. Banks, supposedly the trusted guardians of our money, bought bonds when the interest rate was at zero, and now most of them are underwater, with only the Federal Reserve providing them the cash needed to continue operating.
If one looks at equities, all appears to be pretty good. The S&P 500 has rallied of late and is currently only around 5% below its last all-time-high. That said, there are only a handful of mega companies that are actually contributing to this performance, plus there is still the thorny issue of the investor being able to get a return that is better than inflation and all the higher prices for food and energy etc.
Only two outperforming sectors
Therefore, what is left for the investor? Some might argue that the only two outperforming sectors are technology (AI) and crypto. AI might be more difficult to get into, but as things stand (impending regulation aside) crypto is still the chosen asset of the common investor.
Obviously, given the almost daily barrage of negative press from the mainstream media towards crypto, not so many of the average investors have had the clarity of vision to invest in cryptocurrencies.
Also, crypto land can still be a dangerous place for the uninitiated. All sorts of crypto scams can be chanced upon. That being said, this is arguably the sector with the greatest brains and entrepreneurial talent in the world. The upside here can be exponential compared to the downside.
Regulation incoming
However, given that cryptocurrency is value that can be exchanged between two parties, the regulator wants to get in between and to drown crypto companies with the same kind of obstacles to doing business as traditional companies face.
All this regulation is due to hit the crypto industry over the next couple of years, so perhaps there is still time for the average Joe and Jane to front-run the institutions and invest in the more reputable crypto companies that have solid tech and fundamentals.
Investors need to do their own research
Bitcoin alone, easily the most dependable of the cryptocurrencies, has risen 147% so far this year. Put this against your paltry yield from the bank, or your negative return on bonds, and you have the reason why you need to invest in this sector.
One last parting shot is that investors need to do their own research into crypto, and into traditional financial markets in order to come to their own conclusions. The author of this article does not profess to give any financial advice and just has his own views and opinions on this topic. Stocks, bonds, and crypto can go up as well as down.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
