(ARTICLE) Here’s 5 Reasons Why I Believe Cryptocurrencies Are A Better Investment Than Stocks

Introduction

Cryptocurrencies have taken the whole world like a storm, especially in the last two years.

Even tho cryptocurrencies have been proved to be a volatile asset, many stocks investors (including myself) have been moving their portfolio to cryptocurrencies.

Also, every day more and more people are interested in this world rather than conventional investment options.

Why?

The reason is pretty obvious. Cryptocurrencies have given incredible exponential profitability in a single year.

But does that mean that is the best investment option right now?

Here are 5 reasons I have came up with to why crypto is actually a better investment than Stocks.

Disclaimer: Im not knocking stocks. I still believe Index funds are great. Afterall, I started of investing into index funds. However so far in my journey of investing, I have experienced amazing returns in a shorter time period when staking into crypto.

1. Staking and farming returns are better than Dividends.

Stock market dividends range between 0.5%–7%.

Using a calculator, you’ll see that a £5000 investment that grows 6% annually for 10 years could grow £9000 maximum.

However, cryptocurrencies offer different ways to earn money with your current portfolio, from staking, yield farming, and liquidity mining.

Depending on the platform you use, you can make from 10% to more than 1000% return on investment per year.

Yes. people could say that the risk is bigger on crypto, but even with stable coin, companies like Crypto.com offers a 10% return.

With £5000, you could make a minimum of £12,968.71 in the same ten years without volatility.

More than with Stock and without the risk of lowering your initial investment.

If you don’t know what a “Stable coin” is, read this:

https://www.coinbase.com/learn/crypto-basics/what-is-a-stablecoin

2. Historical returns have been better on cryptocurrencies.

In the last 5 years, the S&P has returned an average of 15% a year. If you invested in a longterm portfolio with £1000 in 2016, now you will probably have around £1750.

However, Bitcoin alone has grown 300% since May 2020.

Ethereum has grown 130.8% since December 2020, so you could double your earnings investing in this coin alone in a year. Many other altcoins have increased from 50% to 1000% this year alone.

Altcoin = any type of cryptocurrency other than Bitcoin. Ethereum is the most popular Altcoin.

3. Market capitalisation can give you better opportunities

The current total crypto market capitalisation is just under 2 trillion US dollars.

To put this number in perspective the market capitalisation of Apple is $2.3T.

That’s just one company.

The total US stock market capitalisation is closer to $50T.

The market capitalisation of gold is $11T.

So, the size of the total crypto market is small compared to other markets.

This creates an opportunity for growth in crypto.

Many people have been putting money in the stock market for a long time.

But although cryptocurrency has actually been around for many years, it’s more recently that investors have been looking at it. For that reason, you are still early to the game.

4. You need less knowledge to invest in Crypto than Stocks.

Another advantage Cryptocurrencies have over Stock is that you can invest while learning. However, you need to have strong knowledge before putting your money on the stock market, or you will lose all your money.

Same with crypto, you can get financially WRECKED if you don’t have a brief understanding of what you are doing.

Another good thing about Cryptocurrencies is that you only need two coins to have a winning portfolio that could give you 50% annual return: Bitcoin and Etherium.

However, you need at least 10 individual Stocks to have a 20% return portfolio in the stock market.

Individual stocks are when you buy into an individual company.

Example: You bought £1,000 worth of apple stock.

Index funds are when you buy into a bunch of companies at one go because all of the individual stocks are put into 1 bag.

S&P 500 index fund is a fund with 500 of the top performing companies put into 1 portfolio.

5. Buying cryptocurrencies is much easier than stocks.

Cryptocurrency platforms are easy to use, with many ways to buy assets (debit and credit cards, PayPal, bank transfer, etc.) and available worldwide.

Also, you can save your coins in external wallets and hardware for more protection and privacy.

Stock platforms are often just available in just a few countries, most of them only offer bank transfers to buy stocks there, and if you plan to use it outside this country, you will have limited stock options.

Closing thoughts

The good thing about investing is that you don’t have to choose.

Both investment options have their benefits and disadvantages, and while cryptocurrencies are the best investment right now, you can also have a great stock portfolio for the long term.

I’d recommend to invest into index funds and use your play money to invest into crypto.

Play money = money you would have wasted anyway on nights out, date nights, smoking, drinking etc…

I’m not an expert at investing however I’d always recommend first to understand why you are investing in something instead of just rushing in because other traders are.

For example, if you decide to take a stake in crypto, consider how it fits with your risk tolerance and financial needs.

I have a podcast coming next Monday going deeper into the psychology of investing.

Speak to you soon.

Till next time.