For most people around the world, deciding where to invest their money is a crucial decision that cannot be made lightly. According to Gallup, around 30% of Americans trust in real estate as the more secure form of investment. Meanwhile, stock investment is also seen as a good option by many, despite how volatile the market can be. However, bitcoin has been steadily growing as a solid investment option, and it’s only expected to continue to do so in 2021.
Real Estate Market vs Stock vs Bitcoin
How are investors supposed to choose between these three options? Well, it’s all going to come down to personal preferences, of course, but also to the risk profile of each investor. When it comes to real estate, some of the pros to be considered are the fact that this is a tangible asset with tax benefits and long-term returns. In addition, investing in real estate can yield high cash flow and it provides investors with versatile opportunities. This is especially important for large investors. That said, real estate is not a fluid asset, and it’s inevitably a high maintenance investment if the property is kept in good shape.
When it comes to bitcoin, it is expected that investment will be adopted more easily by younger generations, who are more familiar with the digital world. That said, even traditional investment firms like Wells Fargo have shown an interest in the subject. The reason for this? Bitcoin has reached a market capitalization estimated at $560 billion in over 12 years. It’s official, bitcoin is here to stay.
Some of the pros of investing in bitcoin are that it’s a peer-to-peer system, making it more accessible. In addition, inflation is not an issue, and entering the cryptocurrency market usually has a lower cost than investing in real estate, and bitcoin does not require costly maintenance. Another benefit is how easy trading bitcoin has become, which is only bound to become easier as more services are offered. Some aspects that could be considered negative are that bitcoin is not a tangible asset and security is still developing and growing.
Meanwhile, the stock market is a well-known investment option, but does that mean it’s the best option? The stock market has existed for decades for good reason. Long-term returns are usually the goal and timing when buying and selling plays an important role, like in real estate and bitcoin. However, access to stock investing might be more limited and the fact that more companies are offering cryptocurrency options now is something to consider.
Fast Homebuyers Now Buying in Cryptocurrency?
Despite the encouraging data surrounding bitcoin and cryptocurrency as a whole, there are always risks and challenges to be considered. Most people still see cryptocurrency investment as a risky endeavor, which might dissuade investors from getting involved. In addition, the economic consequences of the long lockdowns that have taken place in 2020 are only beginning to be felt.
However, thanks to the immediacy offered by cryptocurrency purchases, owners can sell their house to homebuyers fast. Now, some homeowners offer the option of buying in crypto or in cash, which is especially useful for people looking to buy a house quickly.
The challenge for both bitcoin and the stock market is to prove to investors that they continue to be good options for people to invest their money. For crypto, the next step could be finding a spot among traditional investment firms, something that’s already starting to happen. At the end of the day, it’s going to come down to how much trust investors have in these markets.
Lastly, it’s always important to have a diversified portfolio, something that can be done by investing in both real estate and bitcoin. By buying real estate, investors can have a long-term tangible investment, while investing in bitcoin can be a more passive and low-maintenance source of income. Plus, investing in bitcoin allows them to have an easy cash source when they need to sell, which can be easily done.
Major Real Estate Investments and Bitcoin Changes
As the offer of cryptocurrencies widens, with bitcoin and Ethereum at the helm of the market, how they can be used have also expanded considerably. As homeowners become savvier about bitcoin, they open up to the idea of using it for transactions, and there are many pros in doing so.
Also, concerns about the risks of investing in bitcoin have decreased during 2020. During this year, bitcoin showed a growth of 204%. This places it as quite a solid investment for 2021 and the upcoming years.
Using bitcoins for real estate transactions is a great way to prevent fraud, thanks to the existence of certifiable digital IDs. In addition, real estate fees can be lower and investors might benefit from selling or buying real estate tokens in fractions. Furthermore, one of the main principles of cryptocurrency is decentralization and transparency between the parties involved while protecting their privacy at the same time.
