Crypto in The Jungle

[Is there crypto-currency in The Jungle? There sure is … it’s called Bananas, and if you’ve got ’em the rest of us want ’em. Silverback Kent of Sintra, Portugal has recently treated us to insights on Bitcoin and also the so-called “shitcoin” Dogecoin. Here’s a different, more traditional view from this weekend’s issue of Barron’s. It features quotes from Jake Morris of the NY-based Fun Financial ( Jake is a Certified Financial Planner who firm embraces a philosophy of “Plan for your tomorrow, Live for your today.” He also is the fruit of my loins and an outcome of the historica1978 mating season. SB SM]

Sure, Crypto Can Rev Up Your Retire-Early Plan. It Can Also Blow It Up. Be Wary.

By Andrew Palmer May 23, 2021 8:00 am ET

Cryptocurrency has minted instant millionaires. And it has just as quickly reclaimed that seventh figure.

Dusan Zidar/

Digital currencies like Bitcoin have been around for more than a decade and have already endured booms and busts (see also: this past week, which saw Bitcoin tumble as crypto champion Elon Musk began questioning its negative environmental impact).

But the boom in cryptocurrency that has come over the past year reflects a broader acceptance as individuals and corporate investors have bought in. In early 2020, Bitcoin was trading around $7,000 and is now around $40,000 (down from $60,000 in mid-April), buoyed by corporate interest and regulatory clarification that allowed national banks to provide cryptocurrency custody for customers. 

The potentially astronomical gains could be tempting for FIRE adherents who are looking to shorten their road to financial independence or retiring early. And in fact, financial advisor Jake Morris says FIRE-oriented clients are bringing up cryptocurrency more often in their conversations with him. “For younger investors, there’s a natural affinity for crypto,” says Morris, founder of Rhinebeck, N.Y.-based Fun Financial. “It’s of their generation, and it presents a new chance to get ahead.”

But as the latest turn lower suggests, the extreme ups and downs of cryptocurrencies could undermine otherwise solid planning. While Morris encourages clients to consider any investment that can help people achieve financial independence, he doesn’t recommend relying on cryptocurrency to get them there. In fact, he says, the hype around cryptocurrency could lead people away from some of the fundamental principles of a solid FIRE plan. 

Why Crypto Is a Risky Bet

Compared with other investments, cryptocurrency is still in its infancy. Looking at the recent boom and forgetting the years that cryptocurrency prices remained flat—or plummeted—is a form of recency bias. Expecting a cryptocurrency investment to continue surging like it has is an iffy bet for investors looking to retire early, says Morris.

“That’s not a bet that I would make for myself,” Morris says. Instead, he advocates that his FIRE clients stick to the tried-and-true methods of being disciplined about saving and spending and making aggressive, targeted investment in stocks and other proven assets.

Some investors use cryptocurrency as a hedge against inflation, he says. But while digital currencies aren’t tied to the dollar, there’s also no guarantee that their long-term performance will exceed that of the stock market, which has a strong track record stretching back several decades. The S&P 500, for instance, has posted an average annual return of about 6.4% over the past 20 years.

Of course, there are plenty of stories of investors striking it rich with Bitcoin and other digital currencies—and it’s possible to make a lot of money quickly if you time the market correctly. The problem is, timing the market is hard to do. For every story about a Bitcoin millionaire there are many other, less publicized stories about investors losing money in cryptocurrency markets.

“Most FIRE investors are trying to reduce the amount of anxiety they feel around money,” says Morris. “If you’re investing in crypto, it’s hard not to worry about it every day. That’s not the kind of lifestyle most FIRE investors want for themselves.”

The Long-Term Prospects of Crypto

That said, cryptocurrency may become a less volatile investment opportunity in the future. In April, digital currency trading startup Coinbase went public on Nasdaq, the first such company to do so. Further mainstream acceptance could help usher in an era in which cryptocurrency is more widely accepted as a currency and less prone to wild swings in value, making it a more feasible source of income for people living off their savings.

For now, though, Morris says including cryptocurrency as 1% to 5% of your portfolio could be an interesting experiment for FIRE investors who can handle the potential losses—and who don’t think they’ll get stressed out by following the daily ups and downs of the cryptocurrency market.

“It’s up to everybody to say what feels right for them,” he says. “If you can survive a sudden 50% drop in your crypto investment, financially and emotionally, it might be worthwhile to look into.”

You can reach Jake at

And … just to dispel the notion that Certified Financial Planners are conservative stick-in-the-muds, here’s the Halloween greeting that Jake sent to fellow Silverbacks in October.

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