I eagerly spent my pension on Bitcoin last year. Institutions now follow suit
Let me tell you How I did and Why I did it. See you at retirement.
Let me tell you my story about how I ended up buying Bitcoin and Ethereum with my employer-contributed pension pot.
I literally did say that.
It’s nothing more than my personal creative scheme I thought up for myself and my future. I’m not here to hype-up BTC or shill cryptocurrency, but rather to show you my actual Pension SIPP account screenshots, and explain why I did it, and hopefully, my personal musings on justifications make sense to you.
Related: My ambitious financing plan details to buy more even Bitcoin before institutional investments crowd arrival
The below features my experience on this journey, the learnings, realizations, and actual steps that I have taken (against good advice, some Joe would say) to get where I am today.
I do sincerely hope to be in yet a financially-bettered place after my pension matures, in 20 years! Du’h. With that, enjoy the read.
My history with Crypto
I have mined, bought, and traded cryptocurrency for some years 2016–Present. But this barely resulted in any improvement in my HODL-bags, as they say. My excuse has always been, — If bought high, before cryptocurrency crashed, — I merely become the HODLer, — holding onto the bleeding coin/token that keeps crashing for months and years. Until it went back up again that is. Hopefully, that is. 🙏
And In crypto winter, this strategy served me poorly, — this saw my HODL-bags (cryptocurrency in my overall portfolio) fall down to 95% in some cases — which have become termed as the sh*tcoins 😢
Why am I starting with such a dark preamble?
First, I have come to realize that technical know-how did not equate the making any decent returns to show for it. Whether you work in McDees or IT manager, the fact is — trading is not for everyone, no matter how easy kids make it look, on youtube.
History lesson: during The Gold Rush, it’s not the speculators who made it big, but the folks who sold the shovels.
Second, If you have a vision for your investment, (or it could be your very own business for example) particularly a disruptor, — Do Not ask random people for advice. Usually, they are in no better shape of work to understand your vision, let alone give you advice on it, and as a result — following anyone else’s advice will keep you in that — a herd mentality approach to investment.
I did try asking for blockchain, bitcoin “advice” and “feedback” back many years ago, and quickly realized I was on my own. I mean, the stuff people said to me about the general finances and any form of start-up attitudes on technology, never mind the blockchain, and The Bitcoin was just…. not surprising. All that merely highlighted the omitted financial education you get in your high-schools. Anyway.
My initial history recap out of the way to give you some historical context, now we can delve into how I’ve arrived at my decision to buy/HODL/”Invest” (right or wrong) into ETH and BTC with my pension money.
Where am I going with this? I have decided to go out, and put my hard-earned cash and buy thousands of pounds (UK) of Bitcoin and Ethereum, as index tracker funds after all.
Do you think it was wise? not? What are your thoughts? Leave me a comment…
My own reasons
I guess there is not much point going through the BITCOIN and ETHEREUM breakdown — benefits, purposes, compare and contrast with traditional asset classes (and Ponzi schemes/Rat poison as some alternate it with). So I will leave that out.
With my history of dabbling with cryptocurrency, and what I’ve come to realize like probably thousands and millions of others — recently written about here — is that Bitcoin, Blockchain as an asset class is here to stay. It’s a decentralized.
This idea, manifestation, is not going anywhere.
The same goes for the decentralized contracts (ETH/ADA) with cloud computing/execution without hosting and actual ownership.
I did not wish to carry on with mining here and there, buying and selling (trading) which I knew I was not good at. Similarly, I was not too keen to keep multiple wallets with online exchanges, that may be hacked. Or offline wallets which may be lost, — despite being the best option of ownership ❗️
If the proof is in the pudding, and I would compare Bitcoin/Blockchain technology to any nascent idea and disruption, it may be a while to catch up, get adopted, and make a real, tangible impact, which will be reflected in the asset’s price.
Just Ask Amazon — the bookseller back in the day — decades ago.
Or Ask Facebook, — merely 10 years ago, about their futures. 2 Billion+people on their platform!!!
No one knew where they would turn out to be and value in the future. Lots of such examples. It’s called innovation.
Age of technology, the Denominator.
With Bitcoin and Ethereum having much to prove in that regard, I have decided on the appropriate time horizon for a fair outcome.
This is 10–20 years HODL, and stick it all in my SIPP account, as far away from my grubby hands as possible. (Or anyone elses)
My Time Horizon
It’s fair to say, that holding anything short term, is akin to trading. Perhaps you get lucky with great returns, but you must monitor and continuously assess the market, for the best sell signal to get the timing right.
This is not for everyone and can prove to be full of anxiety and stress for the best of us. I was happy to take the simpler laid-back approach, with the wise unknown-attributed view that,
It’s all about time In the Market, not Timing the Market
My SIPP HODL Strategy. Let’s take a long-term view. Investment in startups typically ties in your capital for a good 7+ years.
For the bitcoin story, while it DID, it is no longer a get-rich-quick-scheme. It’s the adoption phase, in my humble opinion, and subsequently, the returns will be less life-changing in the short term, as such price volatility is reduced.
This brings me to the main point. I am in for the long haul.
SIPP is a great place, IMHO, to ride this out. That, as well as a less twitchy risky scenario that I sell-off my Bitcoin holding early, in the short term. Not happening.
It’s locked away, until you’re 55 years of age now, at the time of writing this, in December of 2020.
My Strategy
- 10 years later, whatever new Bitcoin ATH is to happen, I hope to scalpel 20% off and diversify. At this point, my time horizon and life priorities may be changing. This is not to say I can practically benefit from any of this. Again, this is all locked away.
- 20 years later. Now we’re talking. As I count days towards the big sell-it, I guess the timing will be all down to me. It’s my time signal — when I'm 55, not when some other important stock/crypto event occurs. Whatever happens, I will just have to live with it. I would certainly know the valuation figure throughout the years, mind you.
Investing with Self-Investing pension Scheme (SIPP)
This, as the name implies is the pension fund, is an account — which benefits with all the usual tax incentives you enjoy. The example below of SIPP offered by HL — where I hold my own SIPP. It costs 0.45% for the privilege of using their platform. There are now alternative SIPP accounts like Freetrade which simply charge you a flat monthly fee of £6/month.
How did I get here?
I have had a good opportunity to work for a company which, offered a private pension scheme, which they contribute to. This meant that both myself and I was able to contribute the % of my salary and my Employer was contributing something like 3% as well. Over time, as you can imagine this Pension is built up to a sensible amount.
This would have been with an Employer’s own Pension Plan with the likes of Scottish Widows, or Prudential. It matters not. It also does not matter If you want to move an Entire pension or Partial into your SIPP. It’s all up-to-you.
I recall setting up the HL SIPP account, which was a breeze, but it took near 3 months to move the £12,000 that I wanted, into that SIPP account with HargreavesLansdowne. Eventually, it got there.
The best bit is that the Pension contribution is tax-deductible. I paid into the Pension plan, and I paid less tax. My employer has also paid into my private pension. I may have paid £5,000 over the years, but the grand total I transferred was £12,000.
i.e. I was able to buy a lot bigger stake of Bitcoin/Ethereum blockchain assets than if I took money out —and not have my company contribute towards this healthy sum.
Last Minute self-reflection
All in all. with all the above discussed, I have plenty of self-reflection points considering this move and this SIPP pension ETN purchase decision.
I liked the contrarian style — everyone else was(is) talking trash about this emerging asset class. I figured it’s not going away. It’s the technology, the idea. It’s here to say. Just like the 5G network, the smartphone in your pocket. The big institutions were all talking trash about this Bitcoin — fraud, rat poison, and so forth. I like that. This created this narrative from the “elite” and it appears it has worked for the average joe.
The Average Joe — who never bothered to read the Satoshi (Bitcoin) Whitepaper — has also never bothered to get on top of their finances and work on wealth creation. Average Joe is just that. Average. There is nothing wrong with being average. But You, Me, need to realize this and adjust our expectations of others. We also need to take people’s advice with a bucket of salt.
I decided to stop listening to The Joe, and follow my decision — fortune favours the bold
I am a millennial, I don't trust banks and I am taking this asymmetric (IMHO) opportunity risk with Bitcoin. I am reasonably well versed in finance, and I do understand the value of decentralized finance, with smart contracts offered by Ethereum, and similar technologies — Cardano
Why not talk down the asset when you can’t profit from it, but talk it up once you have a stake in it, right? I get this strategy. And that’s what this all is. In a big game, you’re a pawn, and you need to realize that.
I bought both Bitcoin and Ethereum Tracker funds.
UPDATE: The nanny state — at the time of writing is now banning the purchase of such ETNs from Jan 6th, 2021. You can still own it in your portfolio and sell it. Just not buy it. it’s considered too risky now
Not in 2018 and the Crypto Winter that followed, but in Fall of 2020.
Show me the money
Now the fun bit. The bit you wanted to see. (Hope you like, share this post!)
So, how did my idea Bitcoin-with-Pension to practice materialized but how did it all perform.
I must warn that none of this is investment advice, but rather a documentation of my own personal journey. I hope to document updates in this regard, from time to time.
The time horizon considered maybe very short for the purpose of this blog post and transparency. The valuation sum may be very volatile.
But with all that, here goes.
At the time of writing this, 18 months later. Up 122% 😋
One thing to be certain about. This current valuation is 100% irrelevant — it's all about the strategy, and the time horizon. 20 years -1 and counting. 😫
My individual purchases are the XBT provider BTC tracker and ETH tracker.
I bought both of these ETNs back in May 2019, as it shows.
Ethereum purchase notably was poorly timed — not that I tried to. It did poorly most of the time. Meanwhile, BTC has done reasonably well throughout. Enough of hindsight 20:20.
This is the first time I share my accounts in public. To hell with it. Financial education should be democratised, and not for the few elitists.
I cannot access any of these accounts for 20+ years. They are all locked away in the Pension SIPP Account. Whatever that fund may end up with. To the Moon 🌕 or to zero 0️⃣ — only time will tell now.
The Learnings
It takes a serious amount of time and effort to study your area of interest. It takes even more effort, balls of steel, call it what you like, to form a vision of the future and go against the popular opinion. These people (not me obv) are the self-starters, the entrepreneurs, and the pioneers. (Some succeed. Most fail.)
The folks who are right behind them, who come later, these are the early adopters – I hope to fit cozy right here. They face the same naysayers but at least, if they look hard enough, they may get hold of inspiration from those early visionary pioneers.
I came across a good amount of subject matter learnings reading great books like – The Bitcoin Standard for example. Insightful, educational, and inspirational.
You don’t need to be on the bleeding edge to have that edge – you just may end up too early. (Just ask Sinclair C5 electric personal mobility last mile solution)
But the very point I am getting to is that just as you appreciate the comment “don’t let the blind lead the blind” – ensure you’re searching for your investment inspirations in the right place, from the right people.
Judge all investment advice and tips for yourself, Your very own personal circumstances, and Your time horizon.
This is my investment advice.
I hope you enjoyed the frank deep-dive into my pension finances. Whatever your decisions or thoughts on this subject matter – do more of your own research.
If you like, share these learnings and figures with your family and friends, spread the know-how — all the more appreciated. I have invested in Private Equities, Stock, Crypto, and the like. I'm pretty much broke 😿 without decent savings (I know I know — working on it) as I really value the magic of Compound Growth.
This means investing sooner and material gratifications later.
Leave me in the comments section if you want something particularly discussed, or ask any questions.
JF
