Some traditional investments, such as gold, have shown stability for so many years and it has been a favorite for risk-averse investors.
On the other hand, the recent rise of cryptocurrencies or cryptos has attracted mixed reactions on how suitable an investment it is amongst members of the investment world. Other cryptos have emerged to the top alongside traditional key players which have contributed to more debates on whether it’s a good investment option.
The mode of investment in gold or cryptos isn't a big problem as you can choose a gold investing hub or a good cryptocurrency platform to handle your dealings on your behalf. However, the problem comes from choosing the right investment option between the two that’d suit your investment and financial goals.
Gold And Cryptos Compared: Which Is Better Between The Two
If you’ve ever been in a dilemma and you got torn between what type of investment to choose from, may it be gold or forms of cryptocurrencies, here are some of the major factors you should consider before moving forward:
1. Trading Risks
Risk is one of the major factors any investor should consider before putting money in any market. While higher risks can have the potential of higher returns, they could also be the cause of you potentially losing your investment. So, when choosing between gold and cryptocurrencies, you should look at the risk level each one has.
Gold is said to be more stable of the two options meaning it has a low-risk level. It's been in the market for a very long time and it's widely accepted; hence, it's difficult for it to go away or lose value anytime soon. On the other hand, cryptocurrencies offer higher risks. They're volatile, meaning you risk making losses. To determine which one would fit your trading ideals, it’s advised to do proper research and consult with professional traders.
2. Investment Returns
When investing, people are regarded to always want to make the highest returns possible. This means that during the investment period, it’s to be expected that your investment should gain more added value.
While gold has increased in value over the years, the returns curve is less sloppy compared to cryptocurrencies. Investing in gold will mean you have to hold on to it for so many years before making significant profits from it.
On the other hand, cryptos generally have shown an upward trend over a short period. For example, some cryptocurrencies have had a generally bullish trend that has seen them peak the price of gold. So, investors who placed their money on them during their early years made more profits years later compared to those who invested in one ounce of gold during the same period.
However, the trend is said to no be positive across the board for all cryptos. Investing in cryptocurrencies is more of a gamble of high returns, while gold had shown a stable trend due to the continued demand present.
3. Market Volatility
Volatility is another factor you should consider as an investor. Usually, there are two major types of investment: day trading and investing. In day trading, investors take advantage of price fluctuations to make profits; while in investing, investors use long-term stability to make profits.
For investing, gold could prove to be a better option due to the past trend of stability and less volatility compared to crypto. In the case of a day trader, the volatility of cryptocurrencies could be an advantage. This is because the huge price fluctuations happening every second could make investors make significant profits each time they conduct trade.
Better yet, when choosing an investment between gold and crypto, you need to consider the type of investor you want to be and how the volatility of each asset will affect you.
4. Holdings Security
When investing, it's always advisable to look for an investment that is secure from theft and other forms of attacks. When investing in physical gold, you can cushion yourself against theft or loss through insurance. Other investment options such as mutual funds are relatively secure because a reliable company manages them. This makes gold investment a secure option.
Cryptocurrencies are based on blockchain technology that utilizes data being added in a chain of blocks that can't be deleted or altered. This eliminates the cases of duplicate transactions and fraud. However, blockchain technology is a relatively new concept that hasn't been fully explored and there may be loopholes. It’s best to seek out a security expert to help you out making your crypto investments secured from possible attacks.
Moreover, crypto wallets depend on PINs, passwords, or codes, and if someone accesses your account, they can steal your investment. Most wallets have multifactor authentication, but still, there've been cases of fraud and theft thus it’s advisable to practice extra caution.
Both gold and cryptocurrencies can be a good additional investment to your current portfolio if you do your research well. You need to understand the risks that both offers, the potential returns, how secure each one is, and how their volatility will affect your investment goals. Also, it’s recommended to look into the different ways of investing in each one to see which method will work for you.