In Arch, we are always asked when to invest, how much, and what percentages of your investments.
All of this varies depending on the situation and profile of each client, but something we have seen that remains consistent over time is that for all types of investments, the best strategy is to do it in the long term. It's not magic, and it's something that is already known.
If we look at traditional assets like the S&P 500, we see that the S&P 500 has proven to be a solid indicator of long-term profitability over time. Despite market fluctuations and occasional challenges, it has experienced a compound annual growth rate (CAGR) of 10.6% in the last decade.
Performance of the S&P 500 in the last 10 years
Now, if we analyze this for crypto, it gets interesting...
When we look at investment timeframes for crypto, we see that in 3 years or more, historically the returns have been positive.
In simple terms, anyone who has invested in Bitcoin or Ethereum at any time and has waited for more than 3 years without selling has had positive returns.
Now, if we compare a traditional investment portfolio (60% stocks and 40% fixed income) to a portfolio that historically included crypto, it gets even more interesting...
From January 2016 to date, a traditional investment portfolio has had a historical return of 6.51%, while the same investment portfolio with 5% crypto has had a return of 12.84%.
Just 5% of crypto in a traditional portfolio, and holding the position for more than 3 years, has had significant benefits.
Analysis of including crypto in a traditional portfolio
Look at the analysis here: Crypto in a traditional portfolio
The volatility of crypto is extremely important, which is very high, and this means that in the short term, your assets can vary in price considerably, so you must take this into consideration for your investment.
In short, your investment should be long-term and money that you wouldn't need in case of emergency.