 "'With 2 to 5% allocation Bitcoin good addition to investor's portfolio'")
Die-hard equity pundits may have been denouncing cryptocurrencies as a giant scam but Bitcoin has emerged as a clear leader and having a small portion of digital currency in one's portfolio could be a smart move, claims a new book.
In "Investing Decoded: Simple Path to Building A Portfolio in Millions", Anirudh Rathore provides a beginner's guide to acquiring the tools and mindset required to start securing one's financial future.
Taking risks, according to the author, is a key part of investing. He encourages investors to see the market as a tool for long-term success and to stick to their choices rather than changing stocks frequently, which can hurt performance.
Rathore, who taught himself to invest during the uncertainties of the pandemic, emphasises that one doesn't need a finance degree to start growing money. He suggests starting investing as soon as one starts earning, even if it's a small amount.
"I know it sounds easier to say than to actually accomplish it but all those years of not saving and investing are lost years. Compounding of wealth works only if we begin early and continue for decades," he says.
Rathore thinks Bitcoin is a good addition to an investor's portfolio, suggesting a 2 to 5 per cent allocation depending on the individual's risk tolerance.
"The die-hard equity pundits have been denouncing cryptocurrencies for many years as a giant scam, however, slowly, a few hedge fund managers and institutions have had a transformation in their mindset and have started allocating their capital to cryptocurrencies and have even invested their treasury money into crypto assets," he writes.
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This, he says, is a big change and indicates a gradual shift in the attitude of influential investors.
"A lot of the naysayers missed out on the meteoric rise and gains from crypto assets and are now left with a painful left-out feeling. World economics are run by 'fiat money', which is essentially government-issued currency that is not backed by any commodity. This allows governments the flexibility to print money and keep control over their economies," Rathore argues.
"This open, decentralised digital software has been gaining favour ever since... Bitcoin has emerged as the clear leader. Therefore, having a small portion of cryptocurrencies in one's portfolio could be a smart move and worth the research," he says.
Rathore also recommends aligning investment size with one's family's monthly expenses when it comes to determining how much to invest in uncertain times, saying the goal is to cover these expenses with the income from investments, allowing the initial amount to grow and create wealth.
He suggests a mix of stocks, real estate, and gold to protect against market ups and downs, noting that the advantage of this method lies in the fact that the principal amount does not get used for meeting these expenses.
He advises investors to be patient and choose stocks carefully, using basic techniques explained in the book, published by Penguin India. He emphasises that the beauty of the stock market is being a part owner of an organisation and riding the future life of the company along with the entrepreneur and management of the firm.