Japan's Government Pension Fund Considers Diversifying into Bitcoin

[ABCbits]

Japan's Government Pension Fund Considers Diversifying into Bitcoin

Japan's Government Pension Investment Fund (GPIF), which oversees more than $1.5 trillion in assets, has announced plans to explore the possibility of diversifying part of its portfolio into Bitcoin, among other assets.

This move is part of a broader strategy to assess a variety of illiquid alternative assets, including gold, forests, and farmland, for potential inclusion in its investment mix. This marks a significant departure from its traditional focus on stocks and bonds, although the GPIF has not yet committed to investing in these new asset classes. Read more here.


Since Japan government usually is being conservative, IMO it's rather good news. And since it's part of diversification, it shouldn't pose too much risk towards worker's pension fund. Your opinion is greatly appreciated.

[Don Pedro Dinero]

I doubt very much that they will invest more than 5% of bitcoin in the mix but it is very good news. Several pension funds around the world are considering it and I bet it will be commonplace in the future. None of them are likely to have a large percentage because of the volatility, which pension funds tend to avoid, but if a lot of funds join in they can add a lot of buying pressure to the market.

[Lucius]

I doubt very much that they will invest more than 5% of bitcoin in the mix but it is very good news.

I doubt that they will invest more than 1%, because after all, it is the Japanese who always play it safe, and considering that they still haven't solved Mt.Gox, I wonder if their clients will be happy that their pensions are brought into any relationship with Bitcoin.

Several pension funds around the world are considering it and I bet it will be commonplace in the future. None of them are likely to have a large percentage because of the volatility, which pension funds tend to avoid, but if a lot of funds join in they can add a lot of buying pressure to the market.

Some pension funds in the US were investing in Bitcoin a few years ago although I don't know if they are still in it. I somehow wouldn't be too happy if my pension fund invested in Bitcoin, not because I think it's a bad investment, but because of the possibility of someone hacking them or those who would keep Bitcoin for them.

I prefer to do it for myself, as everyone should do, but of course it is difficult to expect that other people have such knowledge and skills to do it in the right way.

https://bitcoinmagazine.com/culture/how-bitcoin-can-save-californias-440-billion-pension-fund

[Tribalchief]

This is indeed great, as we love to hear more news concerning Bitcoin adoption from the Bitcoin community. Aside from gold and stocks, it's best for organizations or countries to also diversify into Bitcoin, as it tends to show qualities of a promising future. However, the issue of the type of funds concerns me. I see no reason why a country should put pension funds at risk, knowing fully well the volatility of Bitcoin.

Pensioners are those who enjoy what they've labored for, so their allocated funds shouldn't go into any investment plan. If allocated security funds can't be tampered with, then I see no reason why pension funds should be tampered with. There are other ways Japan can invest in Bitcoin, as El Salvador has proven to be possible.

[ABCbits]

Pensioners are those who enjoy what they've labored for, so their allocated funds shouldn't go into any investment plan. If allocated security funds can't be tampered with, then I see no reason why pension funds should be tampered with. There are other ways Japan can invest in Bitcoin, as El Salvador has proven to be possible.

But without any investment, money they saved will lose it's value due to inflation over many years. Although there's exception for Japan Yen which have low inflation after 90s.

[Peter90]

I doubt that they will invest more than 1%, because after all, it is the Japanese who always play it safe, and considering that they still haven't solved Mt.Gox, I wonder if their clients will be happy that their pensions are brought into any relationship with Bitcoin.

I agree.
Very good observation about the Japanese being traditionally conservative!

Also very true that the clients of a pension fund are very different from those of an investment fund.
I don't see many japanise pensioners being enthusiastic about the idea of part of their money - and of their financial future - being put into bitcoin.

Third, a pension fund obviously is subject to a bigger scrutiny than an investment fund, so there is a bigger political aspect. Probably that pension fund is overseen by some government agency.
If the investment strategy of a pension fund - and this is a major pension fund - is wrong - even if partly wrong - imagine the loss of confidence for the government.
Loss of confidence which could ends up in public protests etc.

[Lucius]

I agree.
Very good observation about the Japanese being traditionally conservative!

I think that they are quite conservative, but still much less than in the past, and I believe that the reason is that after WW2 they came under strong Western influence, especially that of the US, which still has a very strong influence on Japan as a country.

The fact is that we are still witnessing incredible Japanese inefficiency when it comes to Mt.Gox, which is only proof that they have changed as a nation, unfortunately in a negative sense.

~snip~
If the investment strategy of a pension fund - and this is a major pension fund - is wrong - even if partly wrong - imagine the loss of confidence for the government.
Loss of confidence which could ends up in public protests etc.

Of course, no one likes someone playing with their money when it comes to pensions, but as far as protests are concerned, I would not agree that the average Japanese would protest - because of all developed nations, Japan has the largest national debt of $9.2 trillion, which is more than 260% of GDP.

This is a consequence of the crazy moves that their politicians have been making for decades, but it seems to me that these ideas are not entirely theirs, if you understand what I mean.

[Don Pedro Dinero]

I prefer to do it for myself, as everyone should do, but of course it is difficult to expect that other people have such knowledge and skills to do it in the right way.

Yes of course, I also believe that saving in bitcoin for retirement should be done outside of a pension plan.

Of course, no one likes someone playing with their money when it comes to pensions,

Well, that depends. There are a lot of people who think that and mistakenly take out a fixed income pension plan, or with a large percentage of fixed income that ends up losing money because it doesn't beat inflation. I have mine 100% in equities, which many people would consider gambling with money, and I have a 65% accumulated return.

[Peter90]

However, the issue of the type of funds concerns me. I see no reason why a country should put pension funds at risk, knowing fully well the volatility of Bitcoin.

I agree 100%
It's unfair to old people to subject even a part of the money they hard earned to BTC volatility.
This 5 years chart compares gold with BTC



It doesn't matter that long term it goes up. We are talking about life savings, not about investments.
Good luck to the pension fund management trying to explain in 2023 to those pensioners that part of their money was put into bitcoin in the last 2 years...

[Lucius]

~snip~
Well, that depends. There are a lot of people who think that and mistakenly take out a fixed income pension plan, or with a large percentage of fixed income that ends up losing money because it doesn't beat inflation. I have mine 100% in equities, which many people would consider gambling with money, and I have a 65% accumulated return.

Times are changing and people may realize that traditional methods of saving for retirement are no longer enough to one day have a pension from which they can live a normal life. In addition, today we can safely say that anyone who has invested in Bitcoin for the past 10 years can already retire and enjoy life doing what they want and not wait until they reach the age of 67 to achieve it.

Sometimes you need to take a little risk, like you do, but if that risk is low or moderate, and at the same time it can result in significant profits, I would always choose that option.

It doesn't matter that long term it goes up. We are talking about life savings, not about investments.
Good luck to the pension fund management trying to explain in 2023 to those pensioners that part of their money was put into bitcoin in the last 2 years...

In the end, the only thing that matters is the profit that the funds made by investing in various things, and even if a small percentage of the pension fund is invested in Bitcoin, I think that even if it does not result in a profit, the funds have enough capital to amortize it.

I don't know if you heard about the case of a Canadian pension fund that invested $95 million in a failed crypto exchange and there wasn't much drama when the thing failed. Regardless of how one perceives pension funds, they also have some risky investments that sometimes do not pay off.

https://decrypt.co/114235/ontario-teachers-95m-ftx-pension-fund-limited-impact

[Don Pedro Dinero]

Times are changing and people may realize that traditional methods of saving for retirement are no longer enough to one day have a pension from which they can live a normal life. In addition, today we can safely say that anyone who has invested in Bitcoin for the past 10 years can already retire and enjoy life doing what they want and not wait until they reach the age of 67 to achieve it.

Well, 10 years is very relative, because it means investing 10 years without withdrawing anything or enjoying the profits in bull markets or having sold when the amount is already considerable for you and cashing out can mean a substantial change in the quality of life.

Looking at https://dcabtc.com/, the maximum I can calculate is 9 years. I am going to assume someone with a modest economy, who has been buying $50 in bitcoin every month for 9 years, without selling at any time. What he would have today is about $190,000, which is very good but not enough to retire, but you have to think that someone who has such a limited economy that he can only save $50 a month is very difficult that he has not sold anything when he has accumulated $50,000 or $100,000. Obviously if we're talking about someone who can save $500 a month it's a different story but very few people can, and I see very few on the forums.

Many of us who are in bitcoin forums have not given us to retire, there are even people who have been 10 years and I see them asking for loans. I personally knew about bitcoin 7 years ago and it has not given me enough to retire but I am better off than if I had not known about it.

[Z-tight]

Interesting story and contributions too. In my honest opinion, i am not so sure if it is a good idea, i don't think pension funds should be invested in any risky asset at all. However, there is a contradiction to it, because if they don't take any risky investment with the funds, by the time they start paying pensioners many years later, the money would have been affected by inflation and may not be worth much then.

So many of these workers will also not know anything about BTC, other than what they see in the media, which is largely negative, so this is going to add to their worry.