Article in The Times.I cashed in my funds to invest in bitcoin20 Jun 2020 10:29
The decision to pull money out of leading stock market funds to invest in bitcoin is not one that many 83-year-olds are willing to take. But David Browning from Wiveliscombe in Somerset is not your average 83-year-old and, after some internet research, he believes that his bold move could put him ahead of the cryptocurrency curve.
After the stock market took a nose dive in March, he decided to sell some of the 20 funds he was invested in, including popular investments like the £2.2 billion Fidelity Special Situations fund and the £1.1 bilion Merian UK Alpha funds, to try something different.
It’s a strategy that is unlikely to be recommended by a professional adviser. However, David, a grandfather of six who was a chartered electrical engineer before retiring, says he has done his research.
“Bitcoin comes with its risks, but it has been gaining traction and some people think it’s going to treble in price in the next few years,” he said.
Cryptocurrencies are essentially a digital asset and have been designed to operate like normal currency, but without the banks taking a cut through transactions
One of the big problems with cryptocurrency is that people haven’t been able to spend it in the real world, so you are reliant on an online exchange to make it useful as an actual currency.
You can withdraw money from your bitcoin investment by converting it into cash at a few bitcoin cashpoints around the country, but they are vulnerable to money laundering. This is because criminals can deposit notes through the machines and convert the cash into bitcoin; the nature of the cryptocurrency makes it impossible to trace the origin of the funds.
Despite the downsides, there seems to be a clear push to make cryptocurrencies more widespread. Coin Corner launched a bitcoin cashback service this month, rewarding customers with bitcoin when they shop at a range of 400 online retailers. Bitcoin cashback sites are popular in the US because they give people the chance to earn and own bitcoin while buying their everyday products and services.
Sentiment is changing. While previously most financial institutions wouldn’t even acknowledge bitcoin, some are now getting involved.
Fidelity Investments found that almost a third of 800 institutional investors in Europe and the US owned cryptocurrency or other digital assets such as derivatives. These institutions include pension funds, hedge funds, family offices and investment advisers, showing a shift even among some traditional asset management companies.
But there is still a lot of scepticism. Ben Yearsley, a director of Shore Financial Planning, said: “In my view it isn’t a real investment. It doesn’t produce anything, make a profit or pay a dividend. If you’re buying it you are speculating that the price will go up, but it’s wildly volatile.
“You could argue the same about gold I suppose, although gold has been used as currency for centuries whereas bitcoin has been around for a decade."
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