With the advancement in technology, the traditional investment techniques have also changed rapidly to incorporate new interesting and more profitable ways in the investment plan. Talking of investment today, Cryptocurrency and Real estate investments are still counted among the fastest ways of making huge profits and there is no doubt about that. Choosing the safest asset class is not an easy task, be it investing in gold, gold bonds, stocks, funds, or even crypto and stocks for that matter, every choice you make will decide your future. So, while the future of cryptocurrency and real estate is very bright, it is important to assess what is best for you.
But, firstly what is Cryptocurrency?
A cryptocurrency is a decentralized, peer-to-peer currency that is available in digital format. You must have heard of many companies that use their currencies to make payments to their employees all over the world. That is an example of cryptocurrency. It had gained sudden popularity some years back because of the instant growth in its value. These currencies can be used for direct and private transactions in the place of cash. The cryptocurrency market is large, it consists of thousands of currencies such as Ethereum and XRP, but the most famous of all is Bitcoin.
The transactions made by cryptocurrencies essentially need to be recorded on a decentralized ledger which is known as the Blockchain.
Even though Blockchain is a public database of transactions, your private information is secured by cryptography, which is a process devised to prevent fraud.
And What are the benefits of Cryptocurrency?
Simple entry: Investing in Bitcoin is simple, especially when compared to real estate. If you want to buy real estate, you must have a substantial amount of cash on hand or take out a loan. With Bitcoin, you may get started investing with as little as $100. Because Bitcoin is divided into satoshis, we may buy a fraction at a time and wait for the price to rise.
Cryptocurrency in the long run: The most popular cryptocurrency, bitcoin, has been around since 2009 and the potential it has shown is a witness to how the cryptocurrency market is not faltering anytime soon, and crypto is in for the long run.
- Inflation and price hikes: Since bitcoin is a decentralized currency and since the cryptocurrencies are usually fixed, you don’t need to worry about inflation. Also, the demand of people looking to purchase bitcoins is so high, that you can easily sell your crypto asset within seconds.
- Decentralization: Since cryptocurrencies don’t belong to any country, they don’t have a central or controlling authority over them. This allows you to invest endless amounts in the currency without having to worry about paying government-regulated transaction fees etc.
- High liquidity: If an investor needs money urgently, they may sell their Bitcoin and spend the cash. Selling normally takes only a few minutes.
But what are the Cons of investing in cryptocurrency?
- No regulatory body: Cryptocurrencies are not regulated by any binding authority, this may be good for individuals looking to invest heavily in crypto without having to deal with any authority, but if you are looking to invest a small amount of your money you might have to take extra precautions. This is why some investors have been demanding that crypto be classified and regulated by an authority.
- Volatile Market: In late 2017 Bitcoin had gained instant publicity when its price had gone over $20 thousand, and only in a few months, the price fell even below $ 4 thousand. This was an apt example of the volatility of the currency. And it is this volatility that makes crypto a hard-to-trust investment for many investors. Also, the demand cycle, being very unpredictable can affect your plans. Investors must keep their eyes and ears open to even the slight changes in the market trends. Warren Buffet says that safe investment growth is always like watching a painted wall dry, it is a task of peak patience and not instantaneous.
- Security and Governmental Authority: As we had also mentioned before, cryptocurrencies don’t have a regulating body monitoring all transactions or set up legally binding rules that ensure the safety and security of your information as well as money. And your security is completely in your hands, be it collecting the money-making transactions, etc. While the regulating bodies, tax authorities, and enforcement agencies are still debating the legality of crypto, there are some countries like China, Russia, Vietnam, and Columbia that have completely banned the currency.
- Not widely accepted: Even though crypto is a great way of making money, there are still some businesses and industries that do not accept money in cryptocurrencies.
Secondly, what is Real Estate Investment?
Real estate investment is any purchase or investment you make in property such as land or commercial buildings and plots. We invest in real estate to either use them for personal use or to generate a regular income from them. Real estate investing has been seen as a reliable form of investment for ages. People spend their lifetime’s worth of savings on building a home or buying properties, this is so because real estate is still considered one of the most reliable investment alternatives. It is characterized by the appreciation value of your property, and now, when foreign companies have started investing in the Indian market, setting up factories and offices, the real estate has started prizing higher.
Real Estate investments are considered one of the safest forms of investments. One reason for this is that land and real estate properties, as assets, only appreciate over time and generate high returns. Moreover, if you want to sell your property, the demand for real estate property is always very high. Real Estate, Like crypto, has some pros and cons as well, but most people don’t know how to invest in real estate which can be a problem.
But, why should you invest in Real Estate?
Long-term stability: Real estate makes a good long-term investment because of market stability. You can also lease your property or use it for personal use depending on your requirements.
- Diversify your portfolio: Owning real estate doesn’t just come with its social reputation but you can also use real estate to diversify your portfolio. Also, real estate comes with added financial security.
- Usability and Tangent Asset Value: The best thing about real estate investment is that you can use it to earn profits as well, most people rent their apartments, land, and other properties or they use them to live in as well. This puts the tangible asset value at your disposal which you will always have full control over.
- Tax advantage: One of the primary benefits of investing in real estate is that real estate investors are eligible for a number of tax breaks. Rental property, for example, is free from self-employment tax. Furthermore, tax deductions are allowed for property depreciation, insurance, maintenance, repairs, property tax, legal fees, and so on. Despite this, one of the strongest reasons to invest in real estate is that you will be eligible for a lower tax rate on your long-term investments.
And what are the cons of Real Estate Investments?
Hard to Sell: Even though real estate is a great investment, the growth and response of the market cannot be immediate. The growth is slow and some properties can be really hard to sell, so blocking a lot of money in a property may not be wise.
- Real Estate can be difficult to maintain: Unlike digital cryptocurrencies, real estate investment demands the time and energy of the investor. If you are going to lease your property, it can need regular cleaning and fixing, etc. in the long run, real estate investment is very cost-consuming in comparison to Cryptocurrency, and you should only invest in real estate if you can afford the best solutions.
- Expensive: To state the obvious, purchasing a property is a very costly investment, as the property is always in demand with rising appreciation. Because most people lack the asset, they prefer investing in stocks and mutual funds. A new form of investment is also gaining popularity in the marketing industry, this is known as crowdfunding. Real Estate Crowdfunding is a form of investment where many investors come together and form a money pool to purchase a property.
Cryptocurrencies Vs Real Estates: Which is the better investment option?
The ideal investment for you relies on your own financial experience, knowledge of the asset, and how much risk you are ready to take as you build out your investment portfolio.
While cryptocurrencies are a newer more advanced version of investment, the number of investors in this industry will only rise and in the future we will see groundbreaking investments and returns as well, being mostly digital, crypto requires your time or any other maintenance costs, cryptocurrency can be a very effective form of investment if you are willing to take risks.
Whereas real estate has been one of the most reliable forms of investment for a very long time. It also has its perks, as it is far less volatile than crypto, also when you invest in real estate, you are purchasing a physical property.
In conclusion, investors must weigh down the pros and cons and choose what’s best for them depending on their current requirements and plans. The priority of an investor should always be their comfort and style, and so it is important that investors also test different waters and make educated choices.
Assetmonk is a real estate investment platform that helps you diversify your portfolio by curating investment opportunities in Bangalore, Hyderabad, and Chennai. Via fractional ownership, you can invest in premium Grade-A assets at an affordable price without the worry of legal complications.
Cryptocurrency vs Real Estate FAQ's:
Purchasing a cryptocurrency is like making a high-risk investment which can also give very high returns and in comparison to crypto, real estate is still a better option as the market is not as volatile.
Investing in cryptocurrencies is highly risky but at the same time, it can also be extremely profitable if you invest cautiously, so if you can take the risk, cryptocurrencies are worth it.