For your average investor, I recommend investing in an index fund until they build a portfolio large enough for diversification. Then, and only then, I see no reason not to use Bitcoin is a speculative investment.
There is nothing wrong with speculative investments as long as you have a well balanced portfolio. Not only will it give you a chance to cash in on a bonanza, should it occur. It also adds a little bit of fun to an otherwise dreary portfolio.
I see. I agree with you there. It seems a lot of people seem to think putting important sections/quantities of their savings (i.e. their investment money) into Bitcoin is a safe bet though - and while I love Bitcoin, that's a really bad idea.
I'm quite skeptical on multi-decade future projections. You heard it before: Past performance is no guarantee of future gains. So when reading something about a X%/year average return, you simply can't project that into the future. The future may be entirely different than the past. Economy may stay in a depression your whole lifetime - then what?
Yeah, I have heard that before (and indeed, the page of the brochure that interests us i.e. page 5, echoes the sentiment), but I find it extremely unlikely that the economy would go into a depression for that long. The governments of the world do have economic tools to prevent that and if the worst comes to worst they can create new ones with legislation - we wouldn't like it, but they could easily do it. Over a
long time period, it is likely you will realize a gain. Productivity is always increasing in the world, the only real way for you to lose money over a long period in an index fund is for the world's productivity to start dropping. That'd be bad. Very bad.
How long are you willing to wait for returns?
If you want annual returns, you gotta go with Index Funds.
But, to absolutely get that 7.1% annual return (as the brochure says is expected/possible) you'd have to have your money invested over the same duration of 113 years (1900-2013). That's not to say that you can't achieve those returns, reliably, in shorter time frames it just means that their analysis is made more sound based on the total volume of years they include in the calculation. If you invest for fewer years you increase the risk that your avg. annual return will be something other than 7.1%.
If you're willing to wait for your return, go with bitcoion...because if it goes, it's gonna go far. You just can't consider it a reliable investment yet.
Of course. The longer time period does mean that it averages out to about 7%, and there are going to be fluctuations (though it is likely that with a higher % in bonds and a lower % in equity, these will be smaller) up and down rather than a solid curve upwards. Obviously, for someone following the FIRE path, these time period will be very long - beginning once they start FIRE plans, and ending when they die because once they retire their income is still coming from this. They might not make profit from it in a year, but that could be offset the next year. It is essentially gambling, but larger numbers result in less variance.
Perhaps. I hold a small quantity of private Bitcoin, but not enough to break the bank if Bitcoin was to hit $0 as I do not consider it reliable.