How digital-currency investors differ from the general population | The Economist

Cryptocurrency owners are generally more educated and make more money.

"Using 2019 survey data from the Federal Reserve, the authors found that, in addition to being younger and mostly male, crypto investors are roughly 75% more likely than those who do not invest in crypto to hold a university degree, and twice as likely to earn more than $100,000 per year. Another recent study by Helmut Stix of the Central Bank of Austria also found that crypto investors were more financially literate on average than those who eschew digital currencies.

The researchers found that characteristics vary across different cryptocurrencies. Owners of XRP and ether, for example, are the most educated; Litecoin owners the least educated. Owners of XRP, ether and Stellar are the highest earners; investors in bitcoin earn the least."

How digital-currency investors differ from the general population | The Economist

We hope you didn’t keep your savings in cash or bonds!

Cash Is Trash, And So Are Bonds

In an environment where inflation is relatively high and where it might remain well above 2% for a longer period of time, holding cash naturally results in losses in real dollars. We do believe that every investor should hold a cash position for emergencies and short-term living expenses, how large that position should be is dependent on everyone’s individual situation. But when it comes to longer-term investments, i.e. that part of one’s assets that are not a short-term emergency fund, a too-high cash allocation seems like a bad idea.

At the beginning of the year we warned against holding too much cash, and those that held large cash positions since then have not only gotten less wealthy due to inflation since then, they also missed out on huge gains in equity markets, commodities, real estate, and so on.

With bonds offering a yield of around 1.5%, they do not provide adequate protection against inflation at all. Instead, bond investors do more or less lock in losses in real terms when buying treasuries at current valuations. With the Fed indicating that rates will likely climb in 2022 and 2023, bonds also have downside potential. Buying here could thus force bond investors to sell at a loss if they do not want to hold their positions until they mature.

We do thus believe that “cash is trash” and that a high cash or bond allocation does not make a lot of sense in the current environment.