Stocks v/s Crypto: What is your ultimate investment strategy?
“Save to invest, don’t save to save.” — As author Grant Cardone quotes.
Investment is the moving passive income every individual should consider. It would not only be a support during the retirement period but could be a good asset during crisis. It could require a little working with the choices to make as many types of investments are available in the market such as Stocks, Bonds, Mutual Funds, Crypto, Real Estate and so forth. The rate in which the market fluctuates and the introduction of Crypto has laid a debate and a dilemma amongst the investors.
Everyone in the field of investment has 2 options –
Just like the quote- As you sow, so shall you reap
- For high ROI, risks are high
- For moderate risks, ROI is minimal
Many investors state that the volatility nature of the Cryptocurrency leads to consistently exceptional returns as compared with the other investment assets. A general mindset that mostly everyone has is the volatility being taken as unpredictability that makes many people stay away from investing. However, with the help of the external tools, one can study, analyse the trends, market and measure their steps to predict and prep against the odds.
Peter Borovykh, an Author of the ‘Blockchain Applications in Finance’, believes that the external tools for the use of analysing and studying the market, to predict the future and its outcome. The tool utilization can aid the investors to look up to 3.0x growth as compared to the methods that are currently being used.
Also Read, Are blockchain mutual funds the future investing?
In stocks, there is a tremendous paperwork that needs to be done along with the cost that may occur for the first trade. Following up with this, there’s more to it such as the initial capital required including the efforts to study and analyse the market. While in contrast, you could participate in crypto trading with even the minimal amount which is much more compatible than the regulated traditional finance though it would also need efforts to study cryptocurrency and its technology behind.
Crypto market gives certain privileges as compared to the stock market because at present it is unregulated. Even though few countries have certain requirements but there are no global standard regulations as yet. The other mark crypto has is no intermediaries, unlike stock market that benefits the investor with cost-cutting, time, paperwork and so forth. However, being decentralized crypto does have a downhill for being prone to cyber-attack, fraudulent activities, and several other vicious cycles. The other factor that entices scammers are pulling in the investment in fraudulent tokens or ICOs. In this case, it is very important to make sure that the investor learns about the ICO, study its whitepaper, the token sale, feasibility of the project and so forth.
In stock trading, it can be challenging and a bit off to analyse and capitalize the stock market. It is very important to understand that when external factors are at force the values in stocks are affected and could be vulnerable. For instance, it could be any world events or government decisions and so forth. While the same is not the case in cryptocurrency trading as the increase and decrease in prices of crypto is much tied to one another so if the market peaks, it gradually chains more or less to each other. It leads the investors in cryptocurrencies to understand the movement much more effectively than the stock traders to be charted on unpredictability. With the help of the external tools to analyse the market for advice places secure and successful investments.
In cryptocurrency, there is a chance of gaining returns in a much higher rate and shorter time. The higher the ROI the higher things are at stake for risks. Investment is cryptos are majorly meant for the millennials who could take that chance but if people want to position themselves stable should place their investment in stocks as cryptos tend to fluctuate dramatically than the stocks. A good investment strategy would be a minimal risk with maximum gain however the more the investment the higher the risk and of course the gain. If one is successful in the stock market, they could make an ROI of anywhere between 5% to 15%. In cryptocurrency, because of how volatile the market is as high as possible it has been one could have yield a 144% of ROI.
Oral Carlson-Wee, Founder and CEO of Polychain Capital said, “I’ve been through a lot of moments when other people thought Bitcoin was going to implode, and in those instances, I generally have seen through inaccurate coverage of it.”
In 2017 Cryptocurrency had reached its peak of popularity but the follow-up year that being 2018 drove people sceptic in the market. Considering the advisors have even stated the mere fact of cryptocurrency standing firm through the dramatic fluctuations making it pretty inevitable that it exists to stay in the field. As per the research conducted, it was stated that during the last five years, bitcoin’s returns have been a great deal than all the other currencies across the world. Also, Stocks are the safest investment to trade with, the FANG stocks (Facebook, Amazon, Netflix and Google) are quoted to be the profitable, beneficial and safe investments at present. The performance of all the above stocks has been progressive with minimal fluctuations and major returns. The FANG stocks and other traditional assets in a way are correlated and are prone to be affected by fluctuations amongst. However, a cryptocurrency is not correlated to any other asset than itself.
If we have to compare between a stock and a cryptocurrency, let’s take Amazon and Bitcoin. Amazon was voted as a ‘Best Stock’ in 2017 however if we were to compare their returns, we would observe that Amazon outperformed Bitcoin just ones in four years, even though it did surpass the other stocks progressively.
Investment in crypto or stocks has advantages as well as disadvantages which is the case for every investment that one makes. It’s a spin-wheel game wherein one has to always make sure that they play well with a pinch of luck.
As John Templeton said, “The four most dangerous words in investing: ‘this time it’s different.”
