How to Build an Investment Portfolio With Stocks and Crypto?

Building an investment portfolio is not simply about finding the assets that have gone up the most. A well-structured portfolio starts with understanding your goals, risk tolerance, investment timeframe, and the role each asset plays.

Combining crypto with stocks, bonds, cash, and other assets can create a portfolio with different sources of risk and return. So, how to create an investment portfolio that includes both traditional markets and crypto?

This guide explains the fundamentals of investment portfolio management, how diversification works, how to think about a stock and cryptocurrency portfolio, and a practical portfolio example for investors who want to combine traditional investments with digital assets.

What Is an Investment Portfolio?

An investment portfolio is a collection of financial assets owned by an individual or institution.

Depending on an investor's objectives, a portfolio can contain:

• Stocks
• Bonds
• Cash and cash equivalents
• Exchange-traded funds
• Real estate investments
• Commodities
• Cryptocurrencies
• Other investment products

The purpose of constructing a portfolio is not necessarily to maximise returns from one asset. Instead, investors generally consider how different assets behave relative to one another and how the overall portfolio aligns with their financial objectives and risk tolerance.

Why Portfolio Construction Matters for Stock & Crypto Investors

Crypto can behave very differently from traditional asset classes.

Bitcoin and other cryptocurrencies trade continuously and can experience substantial price movements over relatively short periods. A portfolio concentrated heavily in digital assets can therefore be exposed to significant volatility.

Adding other asset classes does not eliminate investment risk. However, diversification can reduce reliance on the performance of a single asset or market.

For a crypto investor, portfolio construction therefore means asking a broader question:

What role should crypto play within my overall portfolio?

Rather than starting with a specific token, start with the amount of risk and exposure you are comfortable taking.

How to Create an Investment Portfolio

There is no single portfolio allocation that works for everyone. The appropriate approach depends on factors such as your financial situation, investment horizon, objectives, and risk tolerance.

Step 1: Define Your Investment Goal

Start by identifying what the portfolio is designed to achieve.

Your goal might be:

• Long-term wealth accumulation
• Retirement planning
• Preserving capital
• Generating income
• Saving for a major purchase
• Building exposure to emerging technologies

The goal influences how much volatility you may be able to tolerate and how long you can remain invested.

Someone investing for a long-term objective may have a different portfolio structure from someone who expects to need their money within a few years.

Step 2: Understand Your Risk Tolerance

Risk tolerance refers to how much investment loss you are financially and emotionally prepared to accept.

Crypto investors should pay particular attention to this step because digital assets can experience significant price volatility.

Consider asking:

• How much could my portfolio decline before I would need to sell?
• How would I react to a major crypto market correction?
• Do I have sufficient cash for short-term expenses?
• Am I investing money that I may need soon?
• Would a large decline cause me to abandon my investment strategy?

Step 3: Establish an Emergency Fund

Investment capital should generally be separated from money needed for immediate financial obligations.

An emergency fund can provide liquidity for unexpected expenses without requiring you to sell investments during an unfavourable market.

The appropriate amount depends on your personal circumstances, income stability, expenses, and financial obligations.

This is particularly relevant for crypto investors because digital assets can be highly volatile. Using money needed for short-term expenses to trade volatile assets can increase financial pressure during market downturns.

Step 4: Decide Your Asset Allocation

Asset allocation means determining how much of your portfolio is invested in different asset categories.

For example, an investor might divide a portfolio among:

• Equities
• Bonds
• Cash
• Crypto
• Other assets

The important point is to determine the allocation intentionally rather than allowing one asset to become dominant simply because its price increased.

Step 5: Diversify Within Each Asset Class

Diversification does not simply mean owning many assets.

If you own ten technology stocks that respond to the same economic factors, your portfolio may still be heavily concentrated in one investment theme.

Holding Bitcoin, several large-cap altcoins, and multiple tokens with similar market drivers does not necessarily provide as much diversification as it may appear to.

Consider diversification across:

• Asset classes
• Industries
• Geographic markets
• Investment strategies
• Risk factors

Building a Stock and Cryptocurrency Portfolio

A stock and cryptocurrency portfolio combines traditional equity investments with digital assets. These two asset classes have different characteristics.

Combining the two requires understanding that they are not interchangeable.

For example, owning a technology stock does not provide the same exposure as owning Bitcoin, even if both are influenced by broader technology sentiment.

A Simple Investment Portfolio Example

A portfolio with a larger crypto allocation will generally have greater exposure to cryptocurrency market volatility. The investor should therefore be comfortable with the possibility of substantial drawdowns.

How to Manage an Investment Portfolio

Creating a portfolio is only the first step. Investment portfolio management involves monitoring whether the portfolio continues to match your objectives.

Portfolio Allocation

Track the percentage of your portfolio held in each asset class.

A strong crypto rally can cause crypto to become a much larger percentage of the portfolio than originally intended.

Risk Exposure

Look beyond the number of assets you own.

Ask whether several investments depend on the same underlying factor.

For example, a portfolio containing Bitcoin, crypto mining stocks, crypto exchanges, and highly correlated digital assets may have more crypto-market exposure than its individual positions suggest.

Liquidity

Consider how quickly you may need access to your money.

Cash and liquid investments can serve a different purpose from long-term holdings or highly volatile assets.

Costs

Trading fees, fund expenses, spreads, taxes, and other costs can affect long-term returns.

For crypto users, also consider network fees and the costs associated with transferring assets between wallets or platforms.

How Crypto Traders Can Apply Portfolio Management

Crypto markets operate differently from traditional markets, so crypto investors should account for several additional considerations.

24/7 Trading

Crypto markets generally operate continuously. This can make it easier to overtrade in response to short-term price movements.

Stablecoins

Stablecoins can provide liquidity within a crypto portfolio, but they are not identical to bank deposits or government-backed cash. Their risks depend on the specific stablecoin, issuer, reserves, redemption mechanism, and jurisdiction.

Self-Custody

If you hold crypto in a self-custody wallet, you are responsible for securing your private keys or recovery credentials.

Exchange Risk

Assets held through a crypto platform involve different custody and counterparty considerations from assets held directly through self-custody.

Tax Considerations

Buying, selling, exchanging, or otherwise disposing of digital assets can have tax implications depending on your jurisdiction.

Before implementing a portfolio strategy, investors should understand the rules that apply where they live.

Managing a Stock and Crypto Portfolio on Backpack

Backpack brings stocks and crypto together in one account. You can build positions across both markets, earn yield on unallocated USD and use your stock holdings as collateral, connecting more of your portfolio in one place.

Stocks and Crypto, Together

Hold stocks alongside crypto and manage both within Backpack. Having your holdings together makes it easier to review your exposure across markets and decide where to allocate capital as your portfolio evolves.

Put Idle USD to Work

Money waiting for your next investment can still earn. Backpack’s lending feature lets your USD earn yield, while Auto-Lend automates lending for available balances. This gives unallocated funds a role in your portfolio between investments.

Do More With Your Stocks

Your stocks can support more than price exposure. With stock collateral on Backpack, you can borrow USD, buy crypto on margin, trade perpetual futures or hedge stock exposure while keeping your shares.

This connects your existing holdings with new trading and liquidity needs. Borrowing costs and margin requirements still apply, and changes in your collateral’s value affect the positions it supports.

A Practical Portfolio Management Checklist

Use the following checklist when reviewing your portfolio:

Investment portfolio management is the key

Investment portfolio management is the ongoing process of monitoring and adjusting a portfolio to keep it aligned with an investor's objectives, risk tolerance, timeframe, and financial circumstances.

Learning how to create an investment portfolio is less about finding a perfect collection of assets and more about building a framework that you can maintain through different market conditions.