So, you want to make a profit. Should you be a Crypto King or a Real Estate Magnate? On the surface, the answer is quite simple. If you have a high risk tolerance, go crypto! If you would like to have a stable asset class, though, choose real estate. Below the surface, however, there are nuances you should be aware of.
The Cryptocurrency Market
Had you bought Bitcoin (BTC) at the time close to its creation, you could have made a 500,000,000x return over the course of about ten years. It is rare to have such a high ROI for any security. Most lottery tickets can’t do that, but crypto can!
These days, though, the crypto space is a lot more complicated. Many other cryptocurrencies exist now and include large caps like Ethereum (ETH), Litecoin (LTC), Bitcoin Cash (BCH), Ripple (XRP), Cardano (ADA), and Dogecoin (DOGE). To make things even more complicated, several altcoins have hit the scene: Shiba, SuperFarm, Enjin, Decentraland, Polygon, Solano, etc. Non-fungible tokens (NFTs) are also a new digital asset class.
To navigate this complex cryptoscape, it helps to have your assets in a good cryptocurrency exchange and there are many to choose from: Kraken, Gemini, Coinbase, BInance, Kucoin, etc. If you are trading in high volume and you want to have an even greater advantage, it helps to have cryptocurrency exchange aggregator in order to get the best exchange rate. A reliable Coinswitch review is worth checking out if you are interested in selecting the right cryptocurrency exchange aggregator.
Traders should understand, however, that that cryptocurrencies are some of the most volatile asset classes available today. In fact, the cryptocurrency market is even more volatile than the stock market. The cryptocurrency market is also much smaller than the stock market so large players, whales like Elon Musk, can have a much greater impact on the crypto space than they could in other asset class spheres.
The Real Estate Market
As was said in the introduction, real estate is a more stable asset class than cryptocurrencies, on the surface. The truth is, however, is that buying and selling real estate and being a landlord is not as easy as point-and-click, the way it is with stocks, cryptocurrencies and other asset classes.
For one thing, you have to have enough money to invest in property. With cryptos, you can invest as little as ten dollars per trade on many exchanges. With houses and apartments, however, the minimum investments is usually five to six figures or more. Depending on one’s wealth and how much investment capital is available, buying a home or apartment can be very risky, based on the size of the investment alone, regardless of how “safe” real estate investing may be.
Buying a home can be risky enough if you pay cash for the entire home upon purchase, but what if you have a mortgage instead? Buying a home through a mortgage program is naturally more complicated than buying the home outright and way more complicated than simply buying some Ethereum or some shares of Apple stock.
First, the loan terms of your mortgage program and whether or not you even get a mortgage a determined by your credit score. You don’t need a good credit score to buy Litecoin and Bitcoin, unless you wish to trade on margin.
Second, your down payment is considered collateral, which means that you can lose everything if you miss more than one monthly payment. If you are renting out the property you own to tenants and depending on that rental income to make those monthly payments, your investment could be in jeopardy if the cycle should move against you as it did during the 2008 housing market crash. New York State can be a very complicated investment landscape but there are many opportunities to be had and it pays to familiarize oneself with the mortgage options in New York.
There are pros and cons to both the cryptocurrency market and the real estate market Whether you want to be a savvy crypto trader or one of many first, second, and third time homebuyers, the choice is a personal one.
HedgeThink.com is the fund industry’s leading news, research and analysis source for individual and institutional accredited investors and professionals