Some musing on the Barbell Strategy in my crypto thesis
I recently learned about the barbell investment strategy, which suggests investing in the two extremes of high-risk and no-risk assets while avoiding middle-of-the-road choices.
As someone interested in crypto investments, I realized that I had been using this strategy intuitively in my portfolio, with most of my assets on the safe side and a small allocation to risky crypto investments like Hive.
In this blog post, I'll explain how the barbell strategy works and how it can be applied to my crypto thesis.
What Is the Barbell Strategy? The barbell strategy is an investment concept that suggests that the best way to strike a balance between reward and risk is to invest in the two extremes of high-risk and no-risk assets while avoiding middle-of-the-road choices.
All investing strategies involve seeking the best return on investment that is possible given the degree of risk that the investor can tolerate. Investors who follow the barbell strategy insist that the way to achieve that is to go to extremes.
Source: https://www.investopedia.com/articles/investing/013114/barbell-investment-strategy.asp
The barbell investment strategy can help investors balance risk and reward by allocating a portion of their portfolio to high-risk, high-potential investments while keeping the majority of their assets in low-risk, stable investments. This approach allows investors to potentially benefit from the high returns of risky assets while minimizing the risk of losing everything.
In my case, I have a significant portion of my assets on the safe side of the spectrum, such as property, cash savings, and bonds. These assets provide stability and security in case my riskier investments fail. On the other end of the spectrum, I have a small allocation to crypto investments, particularly in the Hive ecosystem. Hive represents a high-risk, high-reward investment with the potential for significant returns if it succeeds.
The barbell strategy has helped me gain clarity about my investment portfolio and how much commitment I should have on Hive. I can focus on managing my stake in Hive while keeping a balanced distribution of assets to avoid getting carried away. If Hive fails, I am not risking everything, but if it succeeds, it could potentially be generational wealth.
The barbell investment strategy can be a useful approach to balancing risk and reward in an investment portfolio. By allocating a portion of assets to high-risk, high-reward investments while keeping the majority in low-risk, stable investments, investors can potentially benefit from the potential upside of risky investments while minimizing the risk of losing everything.
In my case, applying the barbell strategy to my crypto investments has helped me gain clarity about my investment thesis and how to manage my portfolio.
Do you barbell too??
P/S: This is not financial advice, and please do your own due diligence before investing.
If you read this far... and if you are a like-minded Hiver who is on the path to learning more about Hive and crypto investing, and if you like to be tagged when I write such posts, I welcome you to leave a comment below and let me know. We can form an alliance to support each other's growth.
You might be interested in this post, @thatkidsblack, @graciousvic, @deflacion, @jacoalberts, @young-kedar, @svanbo, @sumotori, @zakludick, @poplar-22 and @hankanon!
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