The reason why we won’t invest more than 5% in crypto

crypto cover

Editor’s Note: When we wrote the very first draft of this article back in 2019, crypto had yet to rise from the ashes like a phoenix (check out TWS art, circa 2019!).  During the time it has dwelled in our drafts folder, the asset class has become a sort of a mainstream investment, albeit one that is currently still speculative and volatile.

We are well aware of the divisive nature of cryptocurrencies.

Many traditional bloggers hate it, many crypto-believers have almost religious belief in the asset class. One thing is for sure though, it has become clear that we cannot ignore it.

With an increasing number of institutions getting onboard the crypto-train, we’d thought we publish our thoughts on it, and why we still prefer to be somewhat conservative on it.

We still think crypto is an speculative investment

crypto speculative

The cryptocurrency ecosystem, is still in many ways like the Wild West.

There are numerous articles written by respected names with differing views – never have so many influential people have been so divided on any asset class. Bloomberg has a nice little summary here, but here are some specific articles we think are worth reading which explains our mixed stance.

Ray Dalio – Our Thoughts on Bitcoin 

Michael Saylor – Why MicroStrategy CEO Michael Saylor Bet Company Cash on Bitcoin—and Wants Other Corporations to Join In

Ravi Menon – Crypto Tokens: The Good, The Bad, and The Ugly (yes, the dude from Singapore’s MAS)

Naval Ravikant – Naval Ravikant’s Blockchain Tweetstorm 

At the risk of sounding uncool, we’d got to say that we still think cryptocurrencies are speculative investments. Yes, despite JP Morgan doing their epic U-turn and more institutions getting onboard, there are many questions that make this asset class uncertain.

Here are just three of many to consider:

  • We don’t think blockchain – the technology that allows crypto to be used – is a fad. But will the specific cryptocurrencies that are dominant today be dominant in the future? What if better versions of Bitcoin, Ethereum and Litecoin come along?
  • If decentralised currencies are so hard to regulate, what’s stopping governments from banning them outright? Furthermore, who will protect your investments in the event of theft or fraud?
  • The mining of cryptocurrency is terribly energy intensive – what does this mean for the future production of crypto, especially in a world where we are trying to reduce our carbon footprint?

So, why would we still want to speculate in crypto?

To the horror of some of my more traditional investor friends, I increased my holdings in both Bitcoin and Ethereum (two of the leading crypto currencies by market cap) up to a low-5-digit position this year using Binance  (ref link). Though in retrospect, Binance.sg would have been a better choice, so if you are reading from Singapore, do that first.

In the future, I might consider also making similar plays in alt coins as well. 

Here’s why I did it.


I already invest in the stock market via passively managed local and foreign index funds. This helps me diversify across companies and geographies, but it doesn’t diversify across asset classes (stock market, property, businesses, crypto, fixed income securities etc).

Cryptocurrency might be the riskiest of all these other investments, but it also has a place. It protects me against one specific risk –  if today’s fiat dollar system becomes a thing of the past. 

Hedge against Inflation 

Last year, the US printed trillions of dollars to salvage the economy. While the strategy worked, one side effect you can expect to see is the value of money decreasing.  That means holding on to too much cash might have negative returns. Viewed in this context, cash is indeed trash.

Volatility brings huge potential reward

The 1-year return of the S&P500 is around 50%. In comparison, Bitcoin and Ethereum are both up over 700%. Yes, it’s true that crypto is incredibly volatile, but at the same time, this can work in our favor. With such large potential returns, the rewards are hard to ignore.

That said, in the grand scheme of things, crypto still only comprises 5% of my portfolio. I’m still approaching it with the attitude that I might lose up to 65% of my capital allocated to it.

Why just 5%, then? 

Depending on who you ask, people will either say we’re over-conservative (hfsp, as the believers will say) or risking too much. But here’s our logic why:

We want to sleep at night. Crypto markets are 24/7, and crypto currencies aren’t exactly the most stable stuff around. Minimising the risk you are exposed to also helps us focus on other things, instead of going through emotional rollercoasters all day long. Imagining spending years of your life worrying whether 50% of your net worth is going to be stolen by hackers. Very stressful. 

Our 20s and 30s are really better spent over fussing about other things. We’ve mentioned this many, many times, but our preferred way to earn more money in our 20s, and 30s even is through getting a pay-raise, business and side-hustling.  To us, crypto is a way to protect our finances from technological change, if we grow rich from it, great. If not, meh. 

We just don’t know enough to put more. Look, we get that there are some people out there who are super passionate about cryptocurrencies who’ll say we’re missing out on an opportunity of a lifetime if we don’t sell our house and all our belongings and go all in on crypto. 

But to quote everyone’s favourite and over-cited investing grandpa Warren Buffet, “never invest in what you don’t understand.”

On the flip side, while we have no doubt that Buffet’s wisdom is timeless, the man also didn’t live in the age of blockchain, nor will he have to deal with the full force of the digital revolution when it hits. Plus at 90-years, he has probably earned all the money he’ll ever need in his lifetime.

If we may have the audacity to add on to his words a little, it would be this:

“Never invest in what you don’t understand…

But if you choose to do so, put no more than 5% in it.”

A last word about FOMO and Bitcoin

With the benefit of hindsight, it’s all too easy to be kicking yourself for not investing in crypto sooner. If I had invested my entire $100,000 savings in 2018 when it crashed, I would be at least a millionaire today.

You might be wondering how I feel about missing out on one of the greatest opportunities in history to grow my money.

I’m not going to lie – I do occasionally think about what things would have been like. The FOMO is real, and I am only human.

I’ve learnt to come to terms with my FOMO, simply because there is absolutely no way my 28-year-old self would have dumped $100,000 into BTC when it was at it’s 2018 lows.

Firstly, being able to put $100,000 (or even $20,000) in speculative investments requires a level of privilege (and risk tolerance) I do not possess. The stress would have probably killed me.

Secondly, buying is one thing, holding is another. I know bitcoin investors who suffered 65% losses during the 2018 bubble, materialised their losses and have sat out even since.

My take?

Crypto is hardly the first speculative investment with meteoric returns. And if 2021 is anything to go by with the Gamestop saga, it won’t be the last. Rather than jumping headfirst into every new trend that comes by, build up your wealth conventionally first so you can have the privilege of speculating.

That means creating a position where your speculative investments can’t ruin you financially.

After all, the more money you have, the more risk you can afford. Losing $100,000 when you have $1,000,000, is not a big deal. It’s a disaster if it’s all your money.

Ultimately, common sense applies.

Know the risks. Hope for the best. But prepare for the worst.

When it comes to speculative investments, this is the way.

Stay Woke, Salaryman

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5 replies to “The reason why we won’t invest more than 5% in crypto

  1. Im glad you decided to touch on this topic.

    1) Firstly i would highly recommend you DYOR on “What if better versions of Bitcoin, Ethereum and Litecoin come along?”

    – firstly BTC will never be replicated. it will either go to 0 or infinity. there is no middle ground. The social situation it presents is unlike any other. In another life someone would have taken credit and the idea of Bitcoin will not be what it is today.
    ( check out some of ted nelsons videos on what it really means starting with the history of btc.
    and no. please dont focus on the economical factors/impact of btc. Start with the fundamentals.

    https://www.youtube.com/watch?v=emDJTGTrEm0&t=5s&ab_channel=TheTedNelson )

    – Ethereum and Litecoin are different in nature. one is developmental platform for us developers to build on top.
    from a developmental perspective we build on top of ideas and if there is a better eco system, we bring inter interoperability to the system itself. when we build apps, we build it for both windows and linux. same concept.

    The other has no real use case and wants to be a secondary asset to bitcoin.

    Eth being outdated-
    we dont just discard windows 98 because its outdated. we update the tech. No. Eth is not going to just disappear overnight. Same concept why would u start over with a new brand called pear when apple has a big pool of developers and users. if its reaching the end of the shelf life you will see it a mile away. As long as you keep updated with what they’re trying to achieve and do. (sounds familiar?)

    i think a lot of finance guys are just very alarmed with alot of crypto and tech terms they’re not being taught in school. Crypto takes awhile to understand but i hope you give it a real study before dismissing it.

    As a developer, i dont see the crypto space as a money making machine. it gives me options. i dont have to work at a company. i can work with someone on discord on a project that lives 5000 miles away. decentralized from everything. payments to me. security. laws. everything. ( DYOR ) why i can do this building dapps without security concerns.

    “If decentralised currencies are so hard to regulate, what’s stopping governments from banning them outright? Furthermore, who will protect your investments in the event of theft or fraud?”

    – i think countries that fear this will be left behind. As long as there is 1 country in the world that supports this liquidity will never be an issue. Again.. nothing is stopping you from using a vpn. there are defi exchanges like cake/sushi/uni that allow you to trade/buy/sell without having a centralized exchange interfere with ur privacy. (yeah the gas fees are a problem right now, but with every problem comes a solution)

    With countries like korea just yesterday setting up btc/won pairs i think its getting unlikely.

    “The mining of cryptocurrency is terribly energy intensive – what does this mean for the future production of crypto, especially in a world where we are trying to reduce our carbon footprint?”

    lets be real for a sec. governments dont care. nobody care before Greta Thunberg’s speech and they wont care after. Yeah we are making slight improvements here and there.
    Look at Singapore, where are our electrical car stations? 2022. marks 10 years since the model S was first invented. 9 years later tesla finally allowed to set up base here in Singapore. idk how many more years til we see a push for more affordable vehicles to be fully electric in Singapore.

    okay look. i get that your financial situation is way more different than most people from your blog.

    if you only have $5000 in your savings. with this current injection of fiat you can seriously tell your audience to go buy indexes and stock right? with that kind of small capital your RR should be moved to something like crypto JUST for the bull market.
    I mean isnt it just the most logical thing to do?

    be fearful when others are greedy and greedy when others are fearful.

    btw thanks for letting me know btc is nowhere near the top. 8)


  2. RT anon above.

    Also, cryptocurrencies are the future. Government can’t ban something that is decentralized, unless you want to ban the internet. btw note to author: Not too late to get in 🙂

  3. Good article, I think I will also invest a very small portion into something with unpredictable potential even though it seems like it’s currently rife and plagued with many unregulated and shady practices that are “technically legal” but are very much fraudulent and scammy. And I agree that it is an investment playground for the financially privileged and stable, and not very safe for those who don’t have extensive knowledge of web technologies and cryptocurrencies and those who aren’t at least middle income earners (like me).

    FOMO so far sounds like a tool to try and recruit bigger fools into buying in so that the early investors can cash out no problem, with that said my only fear is that this energy intensive wasteful processing cryptocurrency, all in an effort to keep up a decentralized system, is going to become integrated into everyone’s wallets where the current income gap could be exacerbated; leading to more inequality and classist attitudes that I don’t think is a good look on SG. Not to mention it goes against the eco green plan movement that SG is heading towards.

    1. hard judging and full shade to those crypto tryhards but I’m so lucky I have real life passions for purposes that (actually) helps others and genuine love for crafts that are very celebrated for it’s cultural and community building influence(more than crypto); all of which personally makes my life meaningfully fulfilling more so than money(don’t get me wrong I still care about being paid my worth) and glad I’m not a soulless, profit chasing capitalist greedy pig whose only fulfilment is through flaunting wealth and status, and not someone with insecurities following very kiasu and exploitative advice like “Be fearful when others are greedy and greedy when others are fearful.” smlj

      I hope TWS doesn’t promote something so currently volatile and exploitative to the general uninformed public, myself included, and be cautious with this approach towards cryptocurrency integration as it is still in the process of smoothing out its issues.

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