I’ve been spending a lot of time recently learning about and investing in crypto. It’s been a bumpy ride, but I’ve now settled on an approach that I’m happy with. I hope that by sharing this, it’ll be helpful to others in their journey.
I’ll cover my overall goals, investing strategy, allocation and security.
What’s my goal?
Before I got into crypto investing, my investing strategy was passive, index funds. It mostly still is. Investing in crypto was my way of exposing some of my portfolio to more risk.
My first goal is therefore to significantly beat the market (S&P 500) over the next 5 years. That’s a given, or I wouldn’t be taking the extra risk.
If I was pushed to name an ROI over a defined time period – it would be 10X over five years. I appreciate this is super punchy – especially when you write it out as 1000%. 😉
Even as I write this, I realise I might need to be open to taking more risks to achieve a goal like this. That said, some crypto assets have seen exponential growth in only the last year – so, anything feels possible.
I’m not going to latch too hard onto the 10X over five years. I’ll let things play out for at least a year with my current strategy and will evaluate from there.
Crypto Investing strategy
I wish there was an S&P 500 equivalent for Crypto. Instead, I’ve had to stumble my way towards building a diverse portfolio that I can mostly forget about.
And I do mean stumble…
From investing in Bitcoin only, to also picking up some Ethereum. I then drifted into taking on a lot of small positions in stuff that I didn’t understand properly. I also went through a stage of getting lost in memecoin land. I’ve tried a lot of things and made plenty of mistakes. But, I’ve finally come out the other end with a clear strategy that I hope will be effective over the long-term – and importantly, one which suits my personality.
Bitcoin and Ethereum make up over half of the global cryptocurrency market cap – so I’ve made them nearly half of my portfolio (47%).
I have 15% allocated to other major layer one blockchains. 18% is allocated to specific assets that I’ve researched, understand and am bullish on. The remaining 20% is allocated to a number of indexes which give me broad exposure to DeFI (Decentralised Finance), Metaverse and Data (data and storage services) crypto assets – aswell as a small bet on the DAO (decentralised autonomous organisation) that runs these indexes.
Below is the more detailed breakdown of each asset as it currently stands:
The only further changes I might make is to get better coverage of some other layer one blockchains (Avalanche, Polkadot etc.) and some layer 2 blockchains (Polygon etc.). This will have to wait until I invest more into crypto because I don’t want to re-allocate and mess with the allocations I currently have.
I also now have a minimum amount that I invest in each asset. I don’t want a large, messy portfolio with alot of smaller positions. I would prefer less positions, in which I have a lot of conviction in. A minimum amount to invest in each asset helps me stay true to that.
My crypto allocation
As I mentioned above, before I got into crypto investing, my investing strategy was passive index funds (70% S&P 500, 30% FTSE UK All Share).
Over the last few months, I’ve gradually reallocated funds towards the following allocation:
- Passive Index Fund – 75%
- Crypto – 25%
This feels about the right amount of risk to take for now. It’s a decent jump into crypto investing – whilst still maintaining a strong position in my core investing strategy (passive, index funds).
The other metric I keep an eye on is what percentage of my net worth is in crypto. Currently, it’s 7%. This also feels about right for now.
I can see a scenario where these allocations are larger, but for now I want to let things play out for a while, whilst I continue to educate myself.
As I’ve moved more funds into crypto, I’ve become more sophisticated with my security.
I used Coinbase when I first started investing in crypto. Coinbase is a centralised exchange which makes it very easy to buy, sell and convert crypto.
As I wanted to invest in assets that were not available on Coinbase, I started to use other centralised exchanges too – Gate.io, Bitmart and Binance. Whilst perhaps not as slick as Coinbase, they’re all fairly easy to use.
I think using centralised exchanges is fine for most people. They’re easy to use and with two factor authentication, they’re pretty secure. The one drawback is that whilst technically your crypto assets are on the blockchain – you do not have full self custody of your funds. The exchange does.
So, the next step for me was to start holding assets in a software wallet (often referred to as a hot wallet). I chose Metamask as it’s one of the most popular and easy to use. This acts as your private key for your address on the blockchain (where your assets are). It gives you full self custody of your funds, but it’s also a big responsibility. You’re more susceptible to a hack and if you’re careless with or lose your recovery phrases, you stand to lose everything.
As I shifted more of my investment portfolio over to crypto, I started to learn about hardware wallets (often referred to as cold wallets). These store your keys on an offline device (so they are never exposed online, reducing the chance of being hacked). All transactions are done on the device itself. Of course, you still have the responsibility of self custody, but there’s a much higher level of security.
Recently I finally took the plunge and went for a Trezor Model T. I’ve now moved over 95% of my assets to it. I still use Metamask, but purely as an interface for doing transactions and to be able to view assets that aren’t supported by Trezor Suite (the software that comes with the wallet).
Hopefully the above is helpful if you’re considering your own crypto investing strategy, allocation and security.
It’s very early days for my crypto strategy and portfolio. In the three months it’s taken me to build this portfolio, there’s been alot of volatility and a couple of big crashes. To give some context, Bitcoin is down 31% over 90 days.😬 I have a well thought out strategy and a long term horizon on my side though, so I’m fine to hunker down and play the long game.
But why invest in crypto in the first place? For me, it was two fold.
Firstly, the potential return. Whilst it’s higher risk and more volatile than more traditional assets, I believe the returns will be higher over the long term.
Secondly, I’m bullish on Web 3 and decentralisation. The technology and use cases need time to mature, just like any other disruptive technology. But over the next decade I think it will eat centralisation, in the same way software ate the world.
Lastly, I just want to thank a few people for helping educate me over the last few months.
Thanks to Barry Avraam for continuing to push me to take risk (I’m naturally risk adverse) – but not for persuading me to buy FLOKI 😂
Thanks to Henrique Olifiers for letting me pick his brain when I was trying to understand new concepts.
Thanks to everyone in the INDEX DAO who has helped answer my various questions on their decentralised crypto index funds.
Thanks to the awesome content creators who have helped me educate myself on everything web 3, decentralisation and crypto – Bankless, Kevin Rose, Chris Dixon, Naval Ravikant, Balaji Srinivasan, Fred Wilson (in particular his Buying Crypto Assets article) and the Coin Bureau have all been super helpful.
Tyson Fury is very open about his struggle with mental health. I stumbled across this short video of him talking about what he has found helpful and it’s super inspiring.
What I found interesting is how much emphasis he puts on physical exercise. He consistently comes back to it as being the foundation for feeling good.
Here’s a few quotes:
If I don’t train for two days, I feel totally depressed. You need to stimulate the mind. And I think training is the perfect way to do it. Working out, exercising. Whether you can do a lot or a little – you must do something.
I’m very very sure that working out and having a routine in your life is the answer for mental health problems.
When I don’t go to the gym, I feel terrible. But, when I train on a daily basis, I feel great. Now, I know if I train on a daily basis for the rest of my life, then I don’t think I’m going to suffer with health problems again.
This matches my own experiences. If I push myself hard for an hour or so, I feel great afterwards (even if I felt anxious or unhappy before). I think it’s part physiology and just feeling really good with yourself for working through the discomfort. That feeling lasts for at least a few hours, and often the rest of the day.
If you can get for or five sessions like this done a week, and then some type of active recovery on the other days (walking, biking etc.) – it makes such a difference. I know it does for me.
The video covers a bunch of other advice around mental health, so it’s well worth a watch.
Recently, I laid out some key markers of metabolic health for myself. Since then, I’ve been doing further research and talking to a few people about it.
This mostly strengthened my confidence with the five markers of metabolic health I chose. The only change was an extra marker – body fat / visceral fat. I had originally been thinking about BMI or waist circumference as a key marker – but there are obvious flaws in these. Measuring body fat / visceral fat seems much better.
Having high levels of visceral fat (fat found inside your abdominal cavity and that wraps around your internal organs) and body fat definitely puts you at a higher risk of chronic disease. So, I’m adding them to my key markers of metabolic health.
There were a bunch of markers which didn’t quite make the ’north star’ list, which I’m gong to keep an eye on. These are RHR (resting heart rate), HRV (Heart rate variability), Vitamin D (25 OH) and LDL (bad cholesterol). With the exception of LDL, my measurements are all in a good range for these.
I haven’t quite decided how I feel about LDL. Some people say in the absence of metabolic dysfunction, it’s not a particularly important marker. Others disagree and suggest a high LDL will cause problems. I’m going to continue to look into this.
So, in summary, here are the key markers of metabolic health for myself – along with my own measurements.
A quick caveat. I’ve ignored the normal ranges that are typically advised. Instead, based on my research, I have set what I feel are good and optimal levels for metabolic health.
Body fat / Visceral fat
I don’t have a benchmark or measurement for myself yet. I’m going to get a DEXA scan, which is the most accurate way to measure these. It’s also fairly cheap and non-intrusive.
That said, being able to see your abs is a pretty good benchmark. So, for now, that’s my goal.
- Less than 120/80 mm
Right now, I sit a bit too high. My latest readings averaged out at 130 / 66. It’s not disastrous at all, but ideally I want to see that first number much closer to 120.
- Good: < 32.5 mmol/mol
- Optimal: < 21 mmol/mol
I came in at 30.7 mmol/mol. I’m in the good range, so fairly happy with that. Now the goal is to push it below 30 and to get closer to 21.
C-reactive protein (CRP)
- Good: < 1 mg/l
- Optimal: < 0.5 mg/l
My reading is 0.71 mg/l. Again, pretty good and in the good range. The goal is to push lower than the optimal < 0.5 mg/l.
- Good: < 1 mmol/ml
- Optimal: < 0.85 mmol/ml
My reading is 0.96 mmol/ml. Same story – sitting in the good range, and now need to work at pushing into the optimal range.
- Optimal: > 1.93 mmol/ml
I’m well in the optimal range with a reading of 2.34 mmol/ml here.
What are my immediate focuses for improving my metabolic health markers?
This is a pretty obvious answer for me. The biggest room for improvement (by far) is my diet. I’ve always had a difficult relationship with food and am prone to binge eating. Outside of binge eating, I do time-restricted fasting and eat a mostly paleo diet – high in protein, high in fat and low / moderate in carbs.
The improvement I need to make is to cut out the binge eating. I’m not trying to be 100% paleo. I am fine with the odd treat, and loosening up at weekends. But, right now it feels 50/50 (bad eating / paleo) and I want it to be much closer to 80/20. I need to reduce refined carbohydrates and sugar.
On top of that, I want to get into a habit of stricter time-restricted fasting. Right now, I’m fairly consistent with 8 hours (eating) / 16 hours (fasting). I skip breakfast and eat lunch at about 1PM. My last meal is usually around 8 or 9 PM. But, I drink tea with milk in the mornings, which is technically breaking the fast. Whilst I’m still getting the benefits of consuming fewer calories that tend to come with time-restricted fasting – I’m not getting the fasting benefits. I’d also like to experiment with fasting for 24 hours.
So, my focuses are:
- 80/20 paleo, keeping treats to carefully chosen times and avoiding binge eating.
- Keep to a stricter 8/16 – with a 24 hour fast roughly once a week (evening meal one day, though to evening meal the next day).
If I can only nail the first one, it should have a nice positive impact on my key markers of metabolic health when I next measure them (early March 2022).
I’m 90 days sober today. It’s a good time to reflect in general.
On the whole, life is significantly better. I feel much better about myself. My mood is better and I have less anxiety. I’ve lost 8lbs. I’m sleeping better. My RHR (resting heart rate) is lower and my HRV (heart rate variability) is higher. I’m almost always in the green with my Whoop scores. I’m training more consistently and frequently than I can ever remember (4-6 times a week) and without injury. All of my health habits are also more consistent – eating, supplements, water, caffeine intake etc.
I know that sounds a lot – almost unbelievable. I’ve written before about how I thought alcohol was the root cause behind my struggle with other things. Too much alcohol on one or two evenings can have a devastating domino effect on other parts of my life. My sleep suffers. My mood is affected. I get anxious. I eat more bad foods. I workout less. I stray from proven habits and routines.
It’s also bigger than each of those individual negative impacts. I lose positive momentum. And then it takes a lot of time and effort to regroup and get back on track. And when I do get back on track, like a vicious circle, it just takes one or two days of a little too much alcohol to disrupt it again.
Is it all good news? Mostly. That said, I still get some low level cravings for a nice glass of red. I’m also still trying to figure out how to feel comfortable in situations with a drinking atmosphere. That’s about it though and the positive benefits vastly outweigh those minor issues.
So, where do I go from here?
I’m going to stop counting days for a start. And then I’m just going to keep an open mind and do what feels right. That might mean never drinking again. It might mean finding a way to drink infrequently and with limits, if I feel I can successful with that. But, right now – it means continuing not to drink for the foreseeable.
I’ve been keeping track of my net worth for about five years now. It’s been so useful and I just can’t imagine not doing it now. It’s helped inform many decisions around my finances.
Money isn’t everything. But, you need a baseline to ensure a certain amount of stability in life – a roof over your head, food, clothes etc. Without that, life is very stressful.
Ideally, you also have enough to enjoy life too. This is where a lot of people get into trouble and end up living above their means. I’m not talking about that. I’m talking about taking a trip, having a nice meal at a restaurant or being able to buy things that add value to your life.
And lastly, you want to be moving to a position where you are financially free and have a lot of freedom for how you spend your time. This is what we call retirement, but I hate that word. It assumes you work for most of your life and then you stop so you can take walks and do gardening. What it’s really about is being able to have the freedom to spend your time how you want – and if that’s continued to work because you love it – great. If it’s to stop and travel the world – great. And if it’s a mix of both – great!
Tracking your net worth shines a light on exactly where you are. You can’t hide from the numbers. It also makes it clear if you’re going backwards, treading water or moving forwards. That’s invaluable, because it helps to make better financial decisions.
When I first started tracking my net worth, I made it far too complicated and checked it too frequently. Over time, I’ve simplified it and made better decisions on how I classify certain things. I now update it on roughly a quarterly basis.
I won’t go into lots of detail here, but I’m always happy to have a chat about my approach with anyone.
I use a google sheets spreadsheet to track my net worth. It’s not fancy and fits on one tab.
I have the following sections that I track:
- Emergency fund
- General savings
- Vanguard – FTSE U.K. All Share Index Unit Trust – Accumulation
- Vanguard – U.S. Equity Index Fund – Accumulation
- Cryptocurrency – Coinbase
- Cryptocurrency – Binance
- House equity (approx.)
ASSETS (anything we have that is of significant value that can be liquidated)
OWED TO US (anything that’s owed to us)
- Hardly ever contains anything!
WE OWE (anything we owe)
- Credit card
It’s worth noting that I also break out the percentages of each investment, so I can understand my allocation at any one time. If you’re interested in the details of that, see here.
I also have a summary section that summarises the total amount and the percentage of cash, investments, property and assets.
CASH – 1%
INVESTMENTS – 32%
PROPERTY – 61%
ASSETS – 6%
OWED TO US
I’ve put in my real percentages to help show you how this type of visibility helps you make better decisions. Ideally I would like to see less of a weight on property, more weight on investments and a touch more in cash. So, right now we’re looking to build up a bit more in cash and we’re continuing to invest aggressively. That should help shift the weightings over time.
Every quarter I check the accounts and update the numbers to see where things are heading. The exception is property and assets, which I look at yearly. I only make an adjustment to these if I believe things have materially changed. Importantly, I try to be super conservative here, because I never want my net worth to appear higher than it is. I’d rather have a pleasant surprise, than be disappointed.
The only thing I haven’t mentioned is my pension. I track that also, but for some reason I don’t include it in my net worth. I seem to have a bit of a weird relationship with pensions because of the fact that money is locked away and then accessed later in life with some restrictions. That said, I should probably include it in the total net worth number. I’ll think about that.
If you don’t already track your net worth, I’d highly recommend sitting down and mapping it all out. It’s eye opening when you see it for the first time. I think you’ll find it an inflection point for taking more ownership of your finances and making some different decisions.
There’s no shortage of opinions on what leadership is, and how it differs from management. You can find whole books dedicated to the topic.
I think of leadership as three things:
- Setting and communicating future direction and goals (including the why)
- Attracting and retaining the best talent
- Creating an environment in which people can be successful.
I appreciate there’s alot that sits under those three things. But, ultimately, whatever the level of leadership, it leads back to these three focuses.
For example, if you’re a CEO, it means setting and communicating the overall vision and strategy of the company. You then have to help everyone connect the dots between the near term priorities and the end goal. It also means building a leadership team who will hire the best talent and run the company in a way which gives it the best chance of success.
If you’re managing a small team, it means making the long-term priorities of your team clear and showing how they fit with the company’s overall vision, strategy and goals. You then have to help the team connect the dots between their tasks and the team’s long-term priorities. And lastly, you have to make sure your team has the best talent and is able to get their work done to a high level.
Like I said, there’s a lot of detail that sits under the above three things. But, if you ever feel yourself getting a bit lost in the detail, you’d do well to come back to these three things to help guide what you focus on.
I recently wrote about how to build a strong point of view. I used a few examples – one of which was investing.
Here’s what I said:
A good example of this, is my own investing strategy. I used to only invest in passive index funds. Over the last year or so I’ve been listening to people who are taking more risk. I’ve experimented a bit in this space and have decided I want to take on a bit more risk.
So, I’m transitioning to investing 80% in indexes and 20% in a handful of public companies with a long-term view. The foundations of my point of view are still there (I’m still mostly investing in indexes). But, how much risk I’m willing to take has changed and this ended up shifting my point of view and strategy for how I invest.
I ended up taking this a step further and re-allocating as:
- Indexes – 70%
- Specific public companies – 17%
- Cryptocurrency – 13%
Five months in, I’ve decided to mostly revert back to how I was before.
Why? Two main reasons..
Firstly, the specific public companies basket has significantly under-performed the market in the last five months:
- S&P 500: +12.34%
- Specific public companies: +5.05%
Now, it’s only five months and I should allow a longer time to compare performance. However, one of the reasons I went for passive index funds in the first place was because the data tells us that over 85% of actively managed funds underperform the S&P 500. When I look at my specific public companies basket, it’s one or two poorly performing stocks that are pulling the entire performance down. This highlights the power of diversification (i.e owning an S&P 500 index fund). It also puts into perspective the challenge of trying to beat the market.
Secondly, the specific companies basket is distracting. Ideally I would rarely look at it, but I’m finding that very hard. Now that I have a goal to beat the market, I find myself comparing against it regularly. Also, I have a gut feeling that trying to beat the market is a flawed strategy (because of the first reason). I therefore find myself worrying about my decision to try and do that. Overall, I’ve managed to bring a whole new emotional factor into play, which you don’t get with passive index investing.
The exception is cryptocurrency. I think about it differently to the specific public companies basket. I feel like there’s a once in a lifetime opportunity to get returns that far exceed the market. Therefore it feels much more speculative. It might very well lose half or even most of its value. That’s a risk I’ve come to terms with and it changes how I think about it, and how often I check it.
So, I’m switching to:
- Indexes – 87%
- Cryptocurrency – 13%
This makes me feel much better.
Even though I’ve gone back and forth a bit, it was a useful exercise. It reminded me that even when you have a pretty solid point of view around something, you need to stay open minded and curious. You need to experiment and evolve. Sometimes that will refine your point of view, or perhaps even take you in a different direction. And other times, you might find yourself reverting back – which is still useful as a learning experience. Importantly, if you don’t take those chances, you just get stale.
For the last two weeks, I’ve ruthlessly focused on only one thing at work.
What do I mean by ruthlessly focused? Well, I usually take about an hour at the beginning of the week to reflect on my priorities and plan the week. There’s always a range of stuff to get done – big strategic stuff, projects, smaller tasks, meetings, things to communicate etc. I finish with a plan that feels like the right priorities and is realistic.
I didn’t do any of that in the last two weeks. I knew there was one big thing I had to do really well. This one thing was far more important than everything else, to an order of magnitude.
I allowed myself to get completely lost in it. Other than key meetings, I didn’t think about or do much else. My daily planning was very loose. When I wasn’t working on it, I intentionally didn’t try to tackle other things. Instead, I allowed myself some space and downtime – which only helped me do the one thing better when I came back to it.
I’m coming to the end of those two weeks now. That one thing got done really well and I’m proud of that. But, now it’s time to get back to a more structured way of working starting next week.
This type of ruthless focus can be a really useful way of working when you need to make progress on one very important thing. But, it can also be dangerous. It feels really nice to let go of some of the structure and get lost in something. With that there’s a risk that you end up losing your discipline and structure for longer than you need to. You may also end up neglecting other important things and causing yourself problems. And don’t be surprised if it ruffles some feathers with others when you’re not available to help with things that are important to them.
Here are a few tips for making this type of approach work:
- Correctly identify the one important thing. Don’t use it as an excuse to enjoy the luxury of letting go of structure. It has to be something that is truly of significant importance and will benefit from extreme focus. You’ll usually find that these come around infrequently.
- Know when to do it. The timing has to be right. If you have other commitments that can’t be dropped, it will be difficult to pull off extreme focus on something else.
- Know when to switch back. It’s enticing to let go of the structure and give yourself permission to focus on only one thing. So much so, that it can be easy to stay in that zone for too long. I usually find a few days or one week is enough – two weeks at a maximum. If I focus on only one thing for more than two weeks, I absolutely will end up dropping things that will cause me problems.
- Let others know what you’re doing. That way, they won’t be offended if you’re not available to help them with things that are important to them. They’ll also be less likely to interrupt you.
There are two reasons why everyone should invest.
The obvious first one is to build wealth for yourself. Albert Einstein once described compound interest as the “eighth wonder of the world” for a good reason. If you invest £300 a month at an average of 8% growth per year, you’ll be have more than £1M after a 40 year period (£1,047,302.35 to be exact).
And here’s the kicker, your contributions would only total £144K. This means over £900K is interest!
The less obvious and second reason is that it teaches you to prioritise and focus on the long-term. And it teaches you in the best way – incrementally, by making mistakes.
I bought bitcoin in early 2017, but sold it in early 2018 because it started going down. Yeah, that was fucking stupid. I also bought and sold some tech stocks in that same period, for the same reason. Yep, stupid again. I sold on the dip because I let my emotions get the better of me. I was too focused on the short-term.
I’m incredibly unlikely to make the same mistakes again. I can’t even imagine it. I have 30% of my net worth invested at the moment (mostly index funds, but also some growth funds / stocks and cryptocurrency). If it were halved tomorrow through a market crash, I wouldn’t flinch. I truly believe that. I would just see it as turbulence towards my long-term goal. In fact, I would go as far to say that it might well be the best investment opportunity I’ve ever had. I would remain calm and continue to invest as it recovered (which history tells us it always does).
Investing helped me develop that mindset. When things go wrong (not just in investing, but in life and work), I’m now quite good at remaining calm and taking a step back. I look at the bigger picture, which helps give me the right perspective. And from there, you can decide how to move forward – which might mean doing something different, but also nothing.