Real estate and bitcoin are two popular investment options that are making waves in the global market. Real estate investment is a traditional form of investment dating back thousands of years. Bitcoin, on the other hand, is barely 12 years but has yielded a massive ROI greater than some old forms of investment. The comparison between these two different investment options arose due to the massive increase in bitcoin value which has incited peoples’ interest to buy bitcoin.
Choosing between real estate and bitcoin can be baffling, especially for the modern-day investor. Traditional investors will argue that real estate is the best form of investment because “land always appreciates”. A millennial investor will also say that bitcoin supersedes every other form of investment since it has yielded a massive ROI in just 12 years. However, like all types of investments, they both incur unique risks.
A wise investment will produce a great return on investment for many years to come. On the contrary, you could lose everything if you invest wrongly. It can be difficult to discern which is a wiser choice for you when it comes to these opportunities.
Real estate and bitcoin are on the watchlist of many new investors. Although all investments carry risk but performing extensive research and due diligence with the help of a business advisor will help you make good investment choices. Bearing this in mind, we will discuss some of the pros and cons of both investments that will help you decide to purchase BTC or invest in real estate.
Find out which investment to go for - gold, stocks or Bitcoin Investment?
Understanding Real Estate Investment
For a long time, real estate has been one of the best ways of making money globally. Andrew Carnegie, one of the greatest American industrialists stated real estate made about 90% of all millionaires. Real estate investment is the purchasing of properties with the intent of selling or renting them to make a profit. Real estate is a multifaceted investment ranging from selling lands, leasing of lands, flipping of homes, renting of apartments, and many more. Though real estate lost 42.3% of its value in the US housing market crash of 2008, it has experienced consistent growth ever since. The return of real estate grew by 29% in 2019 according to the S&P 500 Real Estate index.
Successful investors are good at one thing; portfolio diversification. As a real estate investor, you can make money from multiple streams without leaving the real estate niche.
However, when it comes to real estate investment a great deal of effort is involved. Keeping up with property requires regular maintenance, upgrade, and repairs. Owners need to collect rent and worry about utilities, not to mention that some properties are pricey upfront.
Although you can sell property, it can sometimes be difficult to find interested buyers. It takes time to sell, and you might spend a lot of money on upgrading and marketing to only sell at a break-even point. On the other hand, people need somewhere to live, so real estate will always be a necessity:
- Versatile investment opportunities
- Tangible asset
- Tax benefits
- Long-term returns
- High cash flow
- Costly investment
- Not a fluid asset
- High maintenance.
Understanding Bitcoin Investment
Bitcoin is the most common of all cryptocurrencies and the most talked-about investment opportunity right now. With its exponential rise in the last few months, Bitcoin has captured the attention of individual and institutional investors who are making moves to purchase bitcoin. Many cryptocurrencies are now accepted as a medium of exchange all over the world. They are currency backed by blockchain technology. The scarcity and non-inflationary properties of bitcoin make it a better currency than traditional currencies. Institutional and individuals investors are rushing to buy bitcoin because of the astronomic growth in price over the past few months.
Let’s look at some of the characteristics of bitcoin
- Decentralized- Conventional currencies like Yen, Dollar, and Euro are controlled and regulated by central banks. Bitcoin is not controlled by a single institution.
- Anonymous- Financial institutions know almost everything about their customers; phone numbers, credit history, spending habits, etc. With Bitcoin, people can transact without revealing their identity.
- Transparent- All BItcoin transactions are stored permanently in the Blockchain which is to the public.
- Safe-haven - Being the first cryptocurrency, Bitcoin has proven to be a reliable and secure asset.
Although a fairly new invention, it is easier to venture into bitcoin investment than real estate. All you need to do is create a bitcoin wallet for free, buy some bitcoins and watch your ROI increase. Bitcoin is a global currency and can be purchased at any time from any part of the world through exchanges. The price of 1BTC is around $45,000 and analysts are predicting a $100,000 target before the end of 2021. That is a massive 55% ROI if the prediction is correct.
Regardless of the attractive ROI, over 90% of the world’s population cannot afford to buy 1BTC at this moment. Another advantage BTC has over real estate is that you can buy any unit of bitcoin. You can invest in bitcoin with as little as N5,000, unlike real estate where you need millions of naira to buy a valuable property.
Some risks are also associated with bitcoin. The currency is digital, which makes it open to cyber attacks, especially when your wallet is hosted on an exchange. You can also lose your bitcoin holdings if you lose access to your wallet. Another major downside of bitcoin is its volatile nature.
The price can go up by 10% now and dump in the next few minutes by 20%. This is how volatile it is. You could lose your investment in a snap. Bitcoin traders take advantage of this volatility to buy BTC at a low price and sell at a higher price, thus making profits from the price swing.
- Bitcoin is non-inflationary
- Peer-to-peer system.
- Ruled by economic principles.
- Easy to trade.
- Zero maintenance cost.
- Long-term potential.
- Massive return on investment
- High volatility.
- Security issues.
- Not a tangible asset.
- High risk.
- Zero regulations.
While building out your investment portfolio, your financial background, risk tolerance, and knowledge will help you decide if you should buy bitcoin or real estate. Purchasing Bitcoin is high-risk with the potential for high reward and low maintenance, while real estate is a long-term investment that could provide steady income or end in a big payout down the road. So in the long run, it is up to what you can afford and how much risk you are willing to take.