Cryptocurrency or Real Estate When someone has some money put away or a little bit of extra income, the most logical way forward is probably to invest it somewhere. A good investment will not only keep the money safe, but will also multiply it over time. Not everyone can have the guarantee of a steady income these days, so it’s always best to have an investment portfolio as a backup for rainy days.
Also Read: 3 Ways To Make Money Online
The investment niche is a wide one with several options. These options range from older investments like Gold and real estate to more recent ones like cryptocurrency. Due to the different available options, people find it difficult to make wise investment decisions. However, over the years, real estate and bitcoin have been top choices for many investors. Both options have proved to be a great means of growing wealth in the long term. While more people are looking to buy bitcoin, the real estate niche also keeps welcoming new investors on daily basis.
Have you ever thought of the better option between Bitcoin and real estate? If you have been considering these assets and are looking to select the option that’s a good fit for you, let’s examine the pros and cons of each investment. Keep in mind before making any investment decisions to perform your due diligence and consult your financial advisor.
Cryptocurrency vs Real Estate
The real question we’re looking at here is whether an investor should go for cryptocurrency or real estate? Which one is the better investment at the end of the day?
To answer these questions, we should look at the pros and cons of cryptocurrency and real estate one by one. Without further ado, let’s start now:
Should You Invest in Cryptocurrency?
Cryptocurrency, the most popular of which is bitcoin, is one of the newest investment options available. These digital currencies act as a medium of exchange globally as an alternative to money. They are technological currency backed by blockchain technology.
One big benefit of bitcoin investment is that the currency can never be inflated, since there will always be a limited number of bitcoins to go around. There’s also not much involved in purchasing the currency. You obtain your cryptocurrency wallet, purchase your bitcoin and mine. The currency is global and can be sold easily on a cryptocurrency exchange. Transactions are marked in the blockchain, which is publicly available, and bitcoin is currently in high demand.
However, as great as all these perks may be, there are some risk factors. Since bitcoin is an intangible asset, there’s a fair bit of room for error in exchange. The currency is entirely digital, which makes it open to cyberattacks, and security isn’t ironclad. Also, although there are only a limited number of bitcoins, there are many other types of cryptocurrency available that could inflate the market.
Additionally, since this asset is so new, there’s not enough data to really calculate its value. As recent price fluctuations show, the market is volatile. You could easily lose everything you invest, so the decision of whether or not to get involved with bitcoin really comes down to how much you are willing to risk.
Governed by economic principles.
Easy to trade.
- Bubble — inflates and fizzles out.
- Not a tangible asset.
- Security issues.
- Little/no government involvement.
- High risk.
Should You Invest in Real Estate?
Real estate investment is the purchasing of property with the intent of renting or selling it to make a profit. This is a multifaceted investment. You can flip homes, rent business space, be a residential landlord, rent out vacation property or open an Airbnb.
Real estate investing can help diversify your portfolio. Property is also a tangible investment; you can pull money from it and put value back into it. With a proper purchase and research, you can bring in money while putting value into a sellable asset. Additionally, owning property comes with tax breaks.
However, a great deal of effort is involved when it comes to real estate investment. Keeping up with property requires regular maintenance, upgrade and repairs. Owners need to collect rent and worry about utilities, not to mention that purchasing property can be pricey upfront.
Also, property is not an entirely fluid asset. Although you can sell property, it can sometimes be difficult to unload. It takes time to sell, and there’s a chance you might pour a lot of money into something that does not equal out. On the other hand, people need somewhere to live, so real estate will always be a necessity.
- Tangible asset.
- Versatile investment opportunities.
- Tax benefits.
- High cash flow.
- Long-term returns.
- Not a fluid asset.
- Costly investment.
- High maintenance.
Bitcoin OR Real Estate: Which has more potential?
Bitcoin has the potential of having an incredible return on investment. The digital asset is about 12 years old and its adoption keeps growing everyday. Since it was created, the price has grown exponentially. If bitcoin can have this massive growth in just a decade, there is much to expect from this digital asset if you invest and keep it for a longer period.
The growth of the real estate market is quite slow compared to bitcoin. It has stable prices and spikes in price happen on only a few occasions. Unlike bitcoin that has the potential of providing a great return in a short term, real estate investment could take a while before yielding returns.
Impact of economic crisis
One of the reasons for the creation of Bitcoin is to serve as a currency independent of any financial institution. Once you purchase BTC, there is no need to worry about inflation. The digital asset is not controlled by any government or central body thereby free from economic crises of any country.
Conversion to cash
Bitcoin can be converted to cash in minutes. Selling your bitcoin is not a problem. This is because exchange platforms provide an easy means to convert your bitcoin to local currency in minutes.
Real estate investment on the other hand is not easy to sell off. Before you can sell off any of your real estate portfolios, you have to list and find a buyer. This can take months depending on how fast you get a buyer and several other factors.
Which is more stable?
The real estate market is not as volatile as the crypto market. The real estate market is stable and the value doesn’t fluctuate like the value of bitcoin. Bitcoin is highly volatile. Bitcoin had a memorable year in 2017 when it reached an all-time high of $19,000. A couple of days later, bitcoin witnessed a heavy decline and later went as low as $4,000. However, in 2020, bitcoin had a very good run and it went past all the resistance levels to reach $30,000 before setting another ATH of $41,000 in January 2021. This shows how volatile the bitcoin market is.
Which is more expensive to start?
Investing in real estate is expensive. It is one of the main reasons why people consider other investment options. Bitcoin investment is cheaper. You can invest any amount in bitcoin. With just a little amount, you can always buy BTC and see it appreciate in value.
Which is tangible
If you invest in real estate, you own a property already and you have something tangible you can always bank on. Bitcoin investment on the other hand is a digital investment held in a wallet, more like digital money that can be spent at any point in time, unlike real estate that is a physical asset.
The real estate investment class is diversified. You can have multiple real estate portfolios. This means, if something goes wrong with one of the assets, other portfolios will keep you safe. This is different with bitcoin. Irrespective of the number of wallets you have, a fall in the price of bitcoin will affect all your bitcoin portfolio. However, you can diversify your portfolio with several different Altcoins.
Maintaining your real estate investment requires a huge amount. Although, regular maintenance might not be required, however, maintaining it in the long term can cost a whole lot. Bitcoin on the other hand doesn’t require any form of maintenance as it is a digital asset. You don’t have to spend any amount to maintain your bitcoin wallet. All you have to do is purchase BTC and monitor its growth.
Bitcoin doesn’t have a central authority controlling it. You are fully in charge of your assets. It is independent of any financial institution or government. While some people believe this could be a disadvantage since no one is regulating it, this feature has, however, proved to be more of a positive rather than a negative.
Real estate on the other hand has the investment trust that oversees the market.
So, Should You Buy Crypto or Real Estate?
If you are deciding to invest your money in either crypto or real estate, the decision is simple.
Investing in real estate provides you with a tangible asset that will generate a reliable source of income each month in addition to appreciation. There are also numerous tax benefits and incentives associated with real estate and you have the opportunity to utilize leverage to increase your returns. Real estate is also independent of the stock market, so it is a great way to diversify your portfolio and mitigate your overall risk.
Crypto, on the other hand, is more of a speculative guess than an investment based on fundamentals. The price is highly volatile, and there is a chance any investor could lose all or some of their money. It doesn’t pays any dividends and the only way to make money off of it is via capital appreciation.
Real estate has significantly less risk, will give you more consistent returns, and will provide you with a tangible asset. In almost every case, real estate is the better investment, but it couldn’t hurt to diversify with both in your portfolio.
Which investment comes out on top?
As you build out your investment portfolio, your best investment really depends on your personal financial background, your familiarity with the asset and how much you are willing to risk. Purchasing bitcoin is low-maintenance and high-risk with the potential for high reward, while real estate is a long-term investment that could end in a big payout down the road or provide steady income. So it’s ultimately up to what you can afford and what you can afford to lose.