Investment has been the key to achieving long term insurance support system. Many of us are looking for any opportunity to streamline our financial plans - to ensure the security of our money and the growth of our wealth.
Many various options are available in today’s hyper-competitive market for investing your money, however, the rate of return determines which one would be more promising. While most investors start their careers with stocks and bonds, a large number of alternative investments can diversify the traditional portfolio.
Crypto and Real Estate Investment are the two growing investment assets one can find real benefits.
Crypto is a digital platform of currency - being a technological means of investment, trade, and payments. Real estate investment including Real Estate Investment Trust (REIT) is a form of mutual funding company responsible for providing investors with all types of resources allowing them to invest in real estate properties.
Diving further into the details of each category will help comprehend their differences.
Crypto
Even though Cryptocurrencies have been around for a number of years, Crypto is the new trend of the investment marketplace. Bitcoin is the first cryptocurrency that was introduced in 2009 having a little audience. Today with the advancement in technology many other cryptocurrencies are also striking in the trend of digital investments.
Crypto has become popular and profitable because they are decentralized, meaning that they are not issued or regulated by any centralized authority or government. However, the dispute over crypto's long-term viability is raging, with one side saying it is worthless and the other believing it will someday conquer fiat currencies. Below is a list to identify the goods and the bad about crypto relative to real estate investment.
Pros
Open 24/7
Internet is the only requisite for crypto, otherwise, it is simple once you’ve built enough familiarity. It is open and available anytime from anywhere. You can use your money whenever needed by digital currency exchange. Whereas, real estate investment requires following a whole set of procedures and steps.
Individual Asset
The easiness in crypto is that there is no need of having a team to put in big investments, it can all be done individually. You can do it all by yourself over the internet, buying cryptocurrencies selling them trading them, or whatever it is. Whereas real estate investment requires building teams and networks and the assets often is distributed.
Strong Security
The powerful encryption measures used throughout the blockchain ledger and the crypto transactions offer protection from fraud and account tampering while also ensuring privacy.
Globally Traded
Crypto is global, by its very nature it is not subjected to any country's law. Cross-border transfers and transactions are an added benefit of cryptocurrency.
Cons
Extremely volatile
Crypto is prone to market demand, everything in crypto is volatile and unpredictable. The value and the demand of the coin you are mining fluctuate which continuously changes the prices.
Complicated
Your experience and understanding of the current market trend dictate your choice of cryptocurrency and the particular exchange used for making investments. The overall procedure also becomes confusing because there are so many different exchanges and different wallets. Moreover, crypto is relatively new, people end up making the wrong investment without proper knowledge.
No way to recover lost wallets
If you lose your wallet’s password or the login information then your coins are gone forever, the funds are gone as you can’t access them.
No refund policy
In case of any dispute between the two parties doing the crypto transaction, or if any mistake was made while doing the transaction e.g., doing a transaction to a wrong address - the sender cannot retrieve the transaction back or refund the amount.
Real Estate Investment
Real estate investments are best considered to diversify one’s holdings, it is a multifaceted asset. Inflation plays the role of adding value to real estate assets as well. However, real estate requires a lot of effort. It demands your complete attention. Also, the returns of your investment are not transparent as they depend on many different factors, such as location, type of property, investment objective, purchase price, etc.
Pros
Physical Asset
The property owned is physical - your real asset. It has a declared intrinsic worth which an investor owns and manages. Property’s physical nature provides a stable and protected store of value.
Passive Income
Real estate ensures a continuous cash flow that increases over time, all it requires is a thorough analysis of the acquisition, making the right decisions, and cost-effective improvements. Refinancing can increase your margins every month. You can add value to your portfolio through focused active asset management.
Long Term Stability
The real estate investment market is almost predictable, there are fewer chances of you suffering from sudden changes as unexpected value fluctuations are rare. It is a non-volatile asset of the investment market may it be commercial, retirement living, or any other sector.
Unique Benefits over Time
A good investment in real estate appreciates over time. As it is a tangible asset it can be controlled. It helps you gain the leverage of your capital. It guarantees a means of reliable ROI happening with a quick and consistent flow. Other paybacks like tax benefits, monthly income, total profit, and use of leverage are all captivating.
Cons
Property Management and Maintenance Costs
You need to get familiar with all rules and regulations of your property and develop strong marketing expertise. Managing your property will bring new changes to your normal routine being a part of the landlord lifestyle.
Illiquidity Investing
One potential drawback of real estate investment is that it is not very liquid, converting your asset into cash can be a problem. The processes and transactions involved can take days, weeks, or even months.
Expensive Investments
A good deal of cash upfront is required for a single startup. A strategic plan becomes essential to cope up with all the accompanied purchases of your big investment. It involves an ongoing expense including mortgage payments, insurance, taxes, and maintenance. However, getting RIET involved can improve your investment processes.
Takes Time
Your real estate asset takes time to become stable in the market. Expecting big gains in a short time is absurd.
Conclusion
The choice of your investment is subjected to your personal and financial portfolio.
Both crypto and real estate investment are considered to be the fastest way of making profits. Crypto can be a better option for new investors with a small investment budget. Also, as they offer good liquidity you can measure your capital gains.
However, they are no real store of value. Investing in crypto is considered a speculative investment. Weighing real estate investment is the best option you can go for. It is a safe asset and is always going to produce different results and benefits. As you hold on to your real estate property your cash flow proportionally increases and becomes a reliable passive income whereas, with crypto, you don’t get that.
Real estate investment is a business, you can make advancements which is not the case with crypto as it does not offer you replicable success.
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