Everybody knows the saying, “To make money, you got to spend money.” The question is where do I spend it then? The most common choices are also opposites: cryptocurrency and real estate. One represents the possible future while the other stands in for the long past—but is the future truly the future? In this article, we will discuss both to determine which one gets you the most bang for your buck.
Let’s start with demystifying cryptocurrency. After all, “cryptic” is part of its name. Simply put, cryptocurrency, such as Bitcoin, is a totally digital alternative to regular currency, used to exchange for goods and services. They are dollar bills and coins that exist “in the cloud.”
With that out of the way, why are people so interested in cryptocurrency? One, it has little upfront cost to enter into the market. An investment of just $100 will get you started. Two, there is little maintenance: you buy it and let it do its thing. Finally, it is transparent. All transactions are logged and available for the public to see.
While this sounds promising on the surface, cryptocurrency comes with some significant risks. Most notably, it is not regulated by any governments. This seems like it could be an advantage, but it actually means that it is incredibly volatile.
In 2017, Bitcoin’s value went from $1,000 to over $19,000 and then down to $7,000 in a matter of months according to Business Insider. Cryptocurrency also has security risks. Based entirely online, it can be hacked. Wired reported one such incident when a whopping $460 million was stolen.
Compared to cryptocurrency, real estate is slightly more self-explanatory. Buying real estate may be costly upfront; you may have to spring several thousand just to close the sale. Not to mention, you must take into account utilities and repairs.
With that said, these risks can be easy to combat. For one, real estate is versatile. You can build a business on it, rent out the space for private or commercial use, or fix it up and sell it for a profit. All of those provide a consistent cash flow, another great advantage. Lastly, owning real estate comes with tax breaks, which help mitigate things such as depreciation, insurance, repairs, and other potential surprises.
After looking at both cryptocurrency and real estate, you may still be left wondering which one comes out on top. This is a good thing to consider when your own money is on the line.
Nonetheless, it is hard to deny the versatile appeal of real estate. The S&P 500 Real Estate Index reported a 29% increase on returns in 2020. Finally, its stability really wins it out. Cryptocurrency can have meteoric highs, but can then come crashing down, leaving you with nothing. Real estate has highs and lows as well though almost never to the same extent. If you plan on spending money to make some, it is a safer bet to invest it in where it’s “real.”
ABOUT July Ono.
JulyOno.com is a real estate investment company. We have been actively involved in the Lower Mainland area real estate investing for a number of years. Our mission is to provide local housing and commercial workspace to quality tenants while at the same time providing an above average return on investment (R.O.I.) for our investor partners and for ourselves. It is truly a win-win-win way of investing!
July offers her investor partners hands-free investment opportunities. If you are interested to learn how to earn an above-average return on your investment, backed by a solid asset, and without the hassle of being a landlord, please contact July Ono.