I wanted to add bitcoin to my portfolio, but wasn’t sure about the best strategy for buying in. Here’s what 3 experts recommended.

• Bitcoin is gaining more mainstream adoption, so I decided to check out the hype for myself.
• I consulted three financial experts to help craft the best bitcoin investing strategy for me.
• Bitcoin remains a highly volatile investment, which is why I opted for a 1% portfolio allocation.

My investing strategy has never been very complicated or flashy. I typically stick to buying index funds. If I’m feeling crazy, I’ll throw in an individual blue chip stock here and there. After purchasing a security, I subscribe to a “leave it alone” strategy, save for a periodic rebalancing once or twice a year; my employer’s policy also doesn’t allow in-and-out trading.

Given this background, I had never seriously considered buying bitcoin. Yet, in recent weeks, I became increasingly curious about the cryptocurrency.

Postelection, I sensed what can only be described as a seismic vibe shift concerning bitcoin. Not only has its price shot up, eclipsing $100,000 briefly in December, but trillion-dollar asset managers are throwing their support behind bitcoin as well. Bitcoin ETFs have taken off this year, publicly traded companies are adding bitcoin to their coffers, and there are talks of a national bitcoin reserve. BlackRock, the world’s biggest asset manager, recently suggested a bitcoin allocation within a multi-asset portfolio. It seemed to me that bitcoin had gained a new sense of legitimacy as an asset class.

I decided there was no better way to determine if bitcoin was really the next big thing — or if Wall Street simply had FOMO — than by buying bitcoin firsthand. I asked three financial experts for some guidance on how to start investing in bitcoin.

Is it too late to buy?

Before taking the plunge, I had some concerns. Namely, was it a smart choice to buy after the price of bitcoin had already run up so much?

John Haar, managing director at the bitcoin services firm Swan Bitcoin, gave me an analogy: “If someone said ‘Am I too late to bitcoin?’ my answer would be ‘Do you think you’re too late to buying real estate or the S&P 500?’ If an asset is a good storer of value, then it’s going to appreciate over time and there isn’t really a concept of being too late to it.”

Looking at the price of bitcoin, I lamented my lack of foresight in not having stocked up in 2010, when it was trading at mere cents (never mind the fact that I was nine years old). But as they say, the second best time is now.

Haar suggested dollar cost averaging as a way to build up my bitcoin investment. Instead of trying to time the market to buy a dip, I could spend half of a predetermined allocation to bitcoin for an initial purchase. Then, I could slowly spend the other half of the money by buying at regular intervals. By not investing in a lump sum, I would still have the opportunity to take advantage of future price drops, Haar said.

Robert Cannon, a financial advisor at Experity Wealth, echoed similar sentiments: “If you believe in the future potential and the long-term view, the best thing to do is dollar cost averaging.”

Essentially, if you’re thinking about buying and holding bitcoin long-term like I was, the exact timing of when you buy into bitcoin is less important than simply just buying in.

Determining a portfolio weight

I also wondered how much of my portfolio I should allocate to bitcoin.

David Laut, chief investment officer at Abound Financial, told me that he recommends his clients keep a 5% allocation to a combination of gold and bitcoin if they’re looking for a more aggressive investing style. The reason for this is because these assets aren’t typically correlated with the performance of the stock market.

Similar to gold, Cannon has seen people use bitcoin as an inflation hedge in their portfolios.

Ultimately, it depends on your risk tolerance, Cannon told me. He’s advised clients with anything between 1-10% of their portfolio in bitcoin.

Different ways to invest

When it came to actually buying bitcoin, I had a couple of options. I could purchase the cryptocurrency directly on either a centralized or decentralized exchange, through an ETF, or purchase stock in companies related to bitcoin, such as Microstrategy.

Many serious bitcoin investors prefer holding bitcoin directly, either on an exchange or through a self-custody wallet, Haar said. That’s because ETFs provide bitcoin price exposure but not actual ownership.

However, Laut and Cannon both thought ETFs were a great way for a beginner to invest in bitcoin.

“I’d rather own an ETF because I then I don’t have to worry about Coinbase being hacked,” Laut told me.

The crypto space is still nascent and has its risks — Laut pointed to the collapse of FTX just two years ago, which resulted in many investors seeing their holdings evaporate. With an established broker-dealer like Fidelity or Charles Schwab, investors can mitigate regulatory risks, Laut said.

The game plan

I took Cannon, Haar, and Laut’s advice into consideration as I pondered my options.

I decided on the following strategy: I would allocate 1% of my portfolio to bitcoin to start off, with the option to increase my allocation in the future as I became more familiar with the cryptocurrency. I would invest half of it now and invest the rest over the next six months.

Personally, I didn’t want to go through the hassle of setting up an account on a crypto exchange like Coinbase. Luckily, my brokerage firm Fidelity offered a few different ways to get bitcoin exposure — including buying bitcoin directly or through an ETF.

I purchased the iShares Bitcoin Trust ETF (IBIT), which Cannon recommended. However, there’s no shortage of bitcoin ETFs to choose from. Other popular offerings include the Fidelity Wise Origin Bitcoin Fund (FBTC), Grayscale Bitcoin Trust ETF (GBTC), and the ProShares Bitcoin ETF (BITO).

Purchasing a bitcoin ETF was practically the same as purchasing any other stock or ETF, except for one thing: right before I confirmed the trade, Fidelity sent me a pop up message asking me to review and approve an agreement regarding crypto investments and upgrade my investment objective to “Most Aggressive” before proceeding.

It’s easier than ever to buy bitcoin, which might make investors underestimate the risk. But bitcoin is still a highly volatile asset, which sets it apart from traditional stocks.

“If I told you you could lose everything, how much would you put in there?” Cannon asked.

For now, 1% seems like a good plan for me.

Do you have a bitcoin investing story you’d like to share? Feel free to reach out to Christine at cji@businessinsider.com to share your story.