Bitcoin has been the best performing asset in 2020 AND it’s also the most controversial asset. Bitcoin started in 2009 and since its inception, it has grown by 9,000,000%! YES YOU HEARD IT RIGHT...9,000,000%!! But of course, throughout that time, there have been ups and downs...like...HUUUGE ups and downs. Bitcoin is HIGHLY speculative. There has also been news of theft, fraud, price manipulations, scams, and the government blocking access to Bitcoin. But recently, mainstream adoption has really helped increased the price a lot! News of Tesla, Goldman Sachs, and JP Morgan investing in Bitcoin. Paypal and American Express providing a way for people to purchase goods using Bitcoin. So should you sell everything and buy Bitcoin? I mean, it’s has a return of 9,000,000%...you would’ve been a billionaire by now if you started investing from the beginning. Although the returns are still quite attractive, I would still stick with real estate. Here are my reasons:
Regulations - Bitcoin is still quite new and it’s not really regulated. Real estate on the other hand is an asset that is highly regulated with the government. There are laws and rules in place when you purchase and manage them.
Free Market - Real estate is widely adopted by many people as a true asset. There’s a free market where everyone has access to it, and you know how many listings are available for sale. Whereas Bitcoin may or may not be a free market. Do we really know how many Bitcoins are available? The price can be easily manipulated and because there’s not much government regulations, there can be price fixing. There’s no requirements of any auditing of any sort.
Price Volatility - I understand people want Bitcoin to be known as an actual currency, but how can it be a currency if the price volatility and fluctuation swings up and down so much! It can go up and down by like, 50%-70% within a week! Real estate doesn’t have the same return as Bitcoin but the price is much more stable. There’s always a need and a base price for the asset.
Cash Flow - Bitcoin doesn’t pay any dividends. You only gain if the price goes up. Real estate on the other hand can provide a constant flow of income if you’re renting it out.
As you can see, I’m leaning more towards real estate. I don’t want to discourage anyone to invest in Bitcoin. Because if you did invest all your money in Bitcoin these last few years, you would be filthy rich. As long as you know the risk and you’re willing to lose what you put in, then for sure, invest in it.
For me, I have a family to look after and putting my money in Bitcoin is just way too risky for me. I don’t think I’d be able to sleep at night. But, I wouldn’t mind putting in say $1000 in Bitcoin just to have some sort of exposure in it. If I lose it, so be it! It won’t have much impact. But for the majority of my assets, I will invest in what I know, and that’s real estate and stocks.
And there you go! Those are my thoughts on whether you should invest in Bitcoin or real estate. Let me know if you agree or disagree in the comments section below! I would love to hear your thoughts!