Investors are constantly looking to diversify their portfolios, and as such they have to consider investing in various assets, including cryptocurrencies and stocks. These asset types couldn’t be more different from one another, despite being liquid assets that are prone to speculation.
Cryptocurrencies are digital assets that have no physical component. These currencies exist solely on an online ledger that records ownership. A single unit of a cryptocurrency is called a token.
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There are different types of crypto to invest in, from popular coins like Bitcoin and Ethereum to Initial Coin Offerings (ICOs) which are new cryptocurrency projects used to raise funds. Although ICOs can be risky, they can be worth it if the project succeeds, with the most promising ICOs to invest in now including Wall Street Pepe ($WEPE) and Solaxy ($SOLX).
Risk-averse investors should however focus on established currencies. Dogecoin, Bitcoin, Litecoin, and Ethereum have all seen significant gains in the past few months, in part due to the political situation in the US, where the administration has taken a positive stance on crypto.
Although most of the thousands of cryptocurrencies aren’t backed by any hard assets, stablecoins are the exception. These digital currencies are linked to the value of another asset (often a fiat currency), making them less volatile than traditional cryptocurrencies. This makes them a safer investment for people who want to use their crypto in everyday transactions.
It should also be noted that the crypto landscape is not yet well-regulated, with each country taking a different approach. In the US, there are several agencies who are working towards an overarching regulatory framework. Since these assets are not fiat currencies, and they’re not stocks, it makes for a complicated legal landscape. This uncertainty has made many investors hesitant to take the leap and start investing in crypto.
Stocks have been around for hundreds of years and are popular assets for investors. Stocks represent a small part of ownership of a public company. Once you purchase a stock, you’re essentially purchasing a percentage of ownership.
Despite being a favorite investment for many, there are advantages and disadvantages attached to stocks. Just like crypto, stock prices are known to fluctuate. This is due to changing or volatile market conditions, company performance, or economic factors. This volatility results in short-term losses. Investors also need to have a good understanding of both the market and the company they’re investing in, or they risk making poor choices.
Stocks do offer the potential for high returns, though, especially if you invest in stocks that are currently booming. They’re known for offering higher returns than savings accounts or bonds, helping investors reach their financial goals. And, when investors get partial ownership over the publically traded company, they might also be entitled to dividends—a percentage of the company’s profits paid out to investors.
So, which of these assets should you consider investing in this year? Stocks can be volatile since they’re linked to company performance, however their price doesn’t fluctuate nearly as much as many of the popular cryptocurrencies. Investors who want a safe option should consider researching stocks. However, those looking for a riskier investment with higher potential gains will enjoy the thrill of cryptocurrency investing, as there are so many different cryptos on the market.
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