Boosting Your Savings: Should You Invest In Cryptocurrency Or Stocks?
The debate between stocks and cryptocurrency continues. It has been an ongoing debate following the rise in cryptocurrency’s popularity and the extraordinary returns people have earned. Those interested in boosting their savings by investing in alternative forms want to know which option is better.
Each one is drastically different from the other. Both options come with their strengths and weaknesses. With cryptocurrency, it is solely a digital asset. There is no physical aspect as it all exists online. Stocks represent a person’s ownership in a company, where each share bought equals a percentage of ownership in the business.
Knowing the difference is one step to identifying the better choice to increase your savings; understanding the strengths and weaknesses is another.
Here are the advantages and disadvantages of investing in either cryptocurrency or stocks. It could provide you with an idea about which one suits you best.
Advantages Of Investing In Cryptocurrency
Upon hearing the word cryptocurrency, the first thing that springs to mind for many is Bitcoin. Bitcoin was one of the first cryptocurrencies to have been made, having been created in 2009. Since then, there have been new cryptocurrencies that have entered the market.
These include Litecoin, Ethereum and meme cryptocurrency – SHIB. SHIB is an Ethereum based altcoin that is viewed as an alternative to Dogecoin. If you are looking for ways on how to buy SHIB in Canada, Wealthsimple has created an in-depth guide to everything you need to know about meme currency.
There are numerous types of cryptocurrency available on the market to invest in. If the concept of investing in cryptocurrency does sound appealing, the advantages that come with it might sway you to invest. These are just some of the benefits of choosing to invest in cryptocurrency.
- Transparency It Provides -
An extensive level of transparency is provided when investing in cryptocurrency. Each transaction made using a cryptocurrency of a person’s choice is monitored. It is then recorded in a public ledger, more commonly known as the blockchain. After a transaction has been made, it is impossible to alter it. Another reason that cryptocurrency is transparent is that each transaction is verified. Since each cryptocurrency transaction is confirmed, nobody can change it. Any hackers or scammers cannot manipulate the transaction before, during or after it has been made.
- Able To Access Investments 24/7 -
Regardless of the time of day or your location in the world, you can make a cryptocurrency transaction at a time best suited for you. If you are away from your tablet or computer, you could still perform a transaction using your phone. All you need is an internet connection.
- Offers Complete Control
– Those invested in cryptocurrency have complete control over their transactions and funds. It enables them to keep everything safe and anonymous. Any transaction that is made will be done so independently from the individual’s identity. It ensures that no private information is made publicly available, which helps to prevent fraud and identity theft.
Disadvantages Of Investing In Cryptocurrency
Investing in cryptocurrency is a risk that many choose to take. Before investing in cryptocurrency, comparing the advantages and disadvantages is vital. It will help you decide if investing in cryptocurrency is the best option for you. Knowing the weaknesses beforehand will give you an idea of what to expect should an investment not plan out as anticipated. Here are some of the disadvantages to keep in mind.
It is Volatile
One of many primary concerns about investing in cryptocurrency is its volatility. Despite growing tremendously over recent years, it remains a young technology with issues yet to be resolved. It means that the cryptocurrency market is still highly volatile. While the value of cryptocurrency can double in value in a short period, it can also halve in the same timeframe. Due to the risks involved, many of those who invest in cryptocurrency is not afraid of the volatility.
Possible Data Loss
The money you choose to invest in cryptocurrency is stored in your digital wallet. It is stored there and protected by your chosen digital passwords. Accidents do happen. Working on a computer, you may have experienced moments where you have accidentally deleted a file you did not want to delete. The same thing can occur with cryptocurrency. A person can accidentally delete the passwords to their wallet. Unfortunately, they are not able to recover the passwords on their own. The money they have invested is locked in their digital wallet, which has become inaccessible.
Operate In Unregulated Markets
Many of those choose to invest in cryptocurrency is because of one of its main advantages. The advantage is that cryptocurrencies can function without the existence of a central bank to coordinate their activities. Whilst this is one of the main advantages, it is also a massive disadvantage.
Without a central bank or exchange to mediate any transactions made, it means that the majority of them are irreversible. As there is no government or centralized party, there is nothing to enforce the value of cryptocurrency. Instead, the value of the digital coins relies on the value determined by other investors. The uncertain interest can drastically alter the value of cryptocurrency. For instance, if there was a security break for a particular currency, the investment community could immediately lose interest in investing. The impact is that the currency will become worthless almost instantly.
Benefits Of Investing In Stocks
The stock market has a rich history of delivering generous returns to many investors. For almost all investors, investing in the stock market is sensible. If things go well, they are rewarded with exceptional returns towards their savings. There are multiple benefits to investing in stocks; these are just a few of them.
- Start With Little Money
– Contrary to popular belief, you do not need to be wealthy to earn more when investing in stocks. Save a little bit over a few months before investing in a few shares. Taking this approach, you can increase the size of your investments over time. You should also notice a growth in your assets.
- Build Immense Wealth
– Investing in stocks could help you build great wealth. It is partially due to the stock market having an annual gain over a long period. Additionally, there is the potential to earn higher returns in a short period.
- Quick Access To Money
– One of the main positives of stocks is liquidity. You can buy and sell your stocks every weekday when the stock market is open. If you need to access your money quickly, you can do so when investing in stocks.
- Profit From Growing Economy
– A growing economy results in a rise in corporate earnings. When the economy grows, it creates job opportunities. These job opportunities produce incomes that generate sales. The greater the consumer demand is, the more revenues a company receives.
Disadvantages Of Investing In Stocks
Alongside the advantages of investing in stocks, there are a few disadvantages to consider. One of the main disadvantages is the time it takes. To grow a healthy stock will take time. You need to be patient with the process to reap the incredible rewards that investing in the stock market could provide. Having patience will help you to become an excellent investor. These are some of the additional disadvantages worth considering before deciding whether to invest in the stock market.
No Guaranteed Returns
Stocks can outperform various alternative investment types, especially over long periods. However, stocks might not perform as well as expected over your fixed investment period. If your investment period timeframe is longer, it provides your investments with more time to recover from any downturns experienced.
It Is A Volatile Market
Similar to cryptocurrency, the stock market can also be volatile. When you look at the stock market history, although it has always gone up, it hasn’t gone in a straight line. It has experienced crashes and correlations throughout the years. When this occurs, you will need to have the capability to remain calm and sell in a panic.
Possibility To Lose Money
Even those who have years of experience investing in stocks will lose money. Aside from being a volatile market, people are bound to make mistakes when investing in stocks. These mistakes made can lead to them losing money with their investment choices. In addition to this, those who have performed in-depth research into their investment choices will also likely lose money. The stock market is unpredictable; even a well-researched investment might not plan out as anticipated.
The Bottom Line
There is a clear difference between cryptocurrency and stocks. Cryptocurrencies are notorious for being risky and volatile investments. However, investing in stocks comes with the risks a person has to take when investing.
With careful planning and a dash of luck, you could make a significant profit to add to your savings. Before investing, ensure that you have undergone thorough research and careful planning. It could help you to succeed and achieve the target you desire.