How Much Bitcoin Should You Hold in Your Investment Portfolio? The Answer Might Surprise You

Of all the investment asset classes out there today, none is as controversial as cryptocurrency.

Some investors are die-hard crypto bulls, with anywhere from 25% to 100% of their portfolios in Bitcoin or other cryptocurrencies.

This, coupled with its high volatility, gives it a pretty good diversification benefit when added to a portfolio.

Couple this with its potential for seriously high returns, and what you have is a great asset to add for improving your portfolio’s overall risk-return profile.

The best way to hold Bitcoin as part of your investment portfolio is to buy it on an exchange and then transfer it to cold storage.

Canadian investors can also buy Bitcoin exchange-traded funds in their TFSAs or RRSPs.

The first approach allows you to actually own your own Bitcoin , but you are taxed when you sell.

The second approach allows you to sell Bitcoin tax free or tax deferred, as you can now buy it in a TFSA or RRSP.

Investors who “HODL” Bitcoin for a sufficient length of time to ride out the volatility almost always enjoy juicy returns, especially when halving cycles hit.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor.

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