As an avid Boglehead investor, my portfolio is primarily composed of a few low-cost index funds. However, sometimes the simplicity of the portfolio feels a bit boring, and I find myself wanting to invest in something more exciting. When I feel this way, I allow myself to allocate up to 5% of my portfolio into what I call “Fun Money.”

Over the years, I’ve had various Fun Money allocations. Some made money, some lost money, but it doesn’t really matter, it’s only 5% of the portfolio.

My latest Fun Money idea is what I call The Scarcity Portfolio.

The idea is simple: invest in funds composed of scarce assets, as opposed to productive assets like stocks.

Below are the ETFs that make up this portfolio. I invest an equal portion into each fund:

  • IAUM: iShares Gold Trust Micro
  • SLV: iShares Silver Trust
  • IBIT: iShares Bitcoin Trust ETF
  • ETHA: iShares Ethereum Trust ETF
  • REET: iShares Global REIT ETF

Let’s go over each of these funds.

First, we have IAUM and SLV: gold and silver. These are the precious metals that human beings have been obsessed with since the beginning of time. We use gold and silver for jewelry, manufacturing, and, for some, as a hedge against apocalyptic scenarios. As I mentioned in a previous post, we have historically pegged our currency to gold, a system known as the Gold Standard. Some people think we should return to that, but they are wrong!

Next are IBIT and ETHA: Bitcoin and Ethereum. I often think of these as the gold and silver of the digital realm. (We even refer to their extraction as “mining.”) Bitcoin has scarcity baked into its protocol. There can only ever be 21 million Bitcoin, and about 95% has already been mined. It’s also possible for some Bitcoin to be permanently lost, such as when someone misplaces the private key to their Bitcoin wallet.

I admittedly don’t fully understand how Ethereum’s supply works, but I do know it doesn’t have a set maximum supply like Bitcoin. If you’re interested, here’s a link that explains Ethereum’s supply mechanics in more detail.

Last but not least is REET, which is the closest thing you can get to investing in land. Land is obviously a scarce resource since we can’t create more of it. I could go on a tangent about the scarcity of land and housing, but I’ll just note one simple fact: people often refer to real estate as a “good investment.” But here’s the thing, it’s not a good investment because it’s a productive asset. It’s a good investment because it is a scarce asset. A house just sits there and will actually depreciate if not maintained. But the land it sits on is scarce. As time passes, the population increases while the amount of land stays the same. That imbalance drives housing prices up. Okay, I’ll stop there. I could keep going. Perhaps I’ll post a rant about land and housing in the near future.

Anyway, this is The Scarcity Portfolio. I don’t know if it will perform well or not, but that’s okay, because it’s only Fun Money.