Many people are looking for ways to grow their wealth and achieve financial freedom. One of the most common questions they ask is: should I invest in bitcoin or real estate? Both of these assets have their pros and cons, and the answer depends on your goals, risk tolerance, and time horizon. In this blog post, we will compare bitcoin and real estate in terms of safety, returns, liquidity, and diversification.
Table of Contents
What is Bitcoin
Bitcoin, often referred to as a cryptocurrency, is a digital or virtual form of currency that operates on a decentralized network called blockchain. It was introduced in 2009 and has gained significant popularity over the years. Bitcoin allows for secure and direct peer-to-peer transactions without the need for intermediaries like banks. Its value is determined by market demand and supply dynamics.
What is Real Estate
Real estate refers to properties consisting of land, buildings, and natural resources. Real estate investments involve purchasing, owning, or leasing these properties for various purposes such as residential, commercial, or industrial use. Real estate is considered a tangible asset and is typically characterized by long-term value appreciation.
To understand what is long-term value appreciation in real estate. Check out our Pattaya City Condo guide on what are investments into real estate.
For a complete explanation on real estate. FazWaz wrote a complete guide on what is real estate.
Now we have a basic understanding on Bitcoin and real estate. Let's dive in deeper to understand both of their trends, advantages and of course what is comfortable for me to choose.
Bitcoin: History, Trends, and Advantages
Bitcoin, as mentioned earlier, is a digital or virtual currency that operates on a decentralized network known as blockchain. It is not controlled by any central authority, such as a government or financial institution, making it a unique form of currency.
At its core, Bitcoin utilizes cryptography to secure transactions and control the creation of new units. The entire transaction history is recorded on the blockchain, ensuring transparency and preventing fraud. Bitcoin can be bought, sold, or exchanged for other currencies on various cryptocurrency exchanges.
Trends of Bitcoin
Bitcoin's historical performance has been remarkable, capturing the attention of investors worldwide. Since its inception, Bitcoin has experienced significant price fluctuations, showcasing both rapid increases and dramatic declines. It's important to note that past performance does not guarantee future results, and Bitcoin remains a highly volatile investment.
However, the overall trend has shown substantial growth. Bitcoin's price has surged over the years, attracting investors who seek high returns. It's worth noting that Bitcoin's value is influenced by factors such as market demand, adoption, regulatory developments, and macroeconomic conditions.
Advantages to invest in Bitcoin
One of the primary reasons investors are drawn to Bitcoin is its potential for high returns. In the past, Bitcoin has demonstrated the ability to deliver extraordinary gains within relatively short periods. However, it's crucial to acknowledge that with the potential for high returns comes a corresponding level of risk due to Bitcoin's price volatility.
Now we have a few awareness on what some price trends and advantages to invest in Bitcoin. Let's dive into some information on real estate investing.
Real Estate History, Trends and Advantages
Real estate has long been considered a tangible and valuable investment option. It involves the acquisition, ownership, and management of properties such as land, residential homes, commercial buildings, or industrial spaces. Real estate investing can provide a range of opportunities for investors seeking both short-term gains and long-term wealth accumulation.
Benefits for Real Estate Investing
They are lots of benefits to invest in real estate. You have got real estate as an long-term value appreciation with being a tangible asset. Real estate generates generational rental income and tax advantages. How real estate generates rental income is by calculating rental yields. Check out how to calculate rental yield 2 ways.
Let dig deeper into the three main benefits to invest into real estate.
Tangible Asset and Long-Term Value
One of the primary advantages of investing in real estate is the tangible nature of the asset. Unlike stocks or cryptocurrencies, real estate offers a physical property that holds inherent value. Properties have the potential to appreciate over time, allowing investors to build equity and increase their net worth. Real estate also provides a sense of security as it can serve as a place of residence or be utilized for various purposes, adding to its long-term value.
Generates Generational Rental Income
Investing in real estate can provide a steady stream of income through rental properties. By owning residential or commercial properties, investors can lease them to tenants and collect rental payments on a monthly basis. Rental income not only covers expenses such as mortgage payments, property maintenance, and taxes but also generates positive cash flow, resulting in potential profitability. Additionally, as rental rates increase over time, investors can benefit from increased rental income and improved cash flow.
Real estate investing offers several tax advantages that can positively impact an investor's financial position. Tax deductions are available for expenses related to property ownership, including mortgage interest, property taxes, insurance premiums, and maintenance costs. Additionally, real estate investors may benefit from depreciation, which allows for a portion of the property's value to be deducted annually. These tax benefits can help lower an investor's overall tax liability and increase the return on investment.
Now you have got both answers individually between Bitcoin and real estate investments. The next question is to compare both investments options. And to answer your query. Is Bitcoin or real estate investment better for me?
Compare Bitcoin and Real Estate Investments
We have a table for you to compare and constrast Bitcoin and real estate investments. We separate it with three different categories.
|A. Risks Factors of Bitcion and Real Estate Investing|
|Bitcoin:||Bitcion have higher risk because of higher volatility. Signifant changes in the short term.|
|Real Estate||Real Estate is influrence by economic factors, changes in interest rates and more. Less volatiity unless you see a big shift in the market.|
|B. What to Consider in Both Investments|
|Bitcoin||You want major benefits in the short term, bitcoin is one the investment tools. Volatity is higher compare with real estate.|
|Real Estate||Real estate investing is a long-term picture you see. With generational rental income. Or price appreciation when the land areas increase in value|
|C. Price Trends Analytics|
|Bitcoin||Bitcoin returns are high with good returns of dividends. In the short-term you have great returns when to get your investments back.|
|Real Estate||Real estate trends you see in the long-term maybe after your complete your loan. Or when the interest rate is lower and you have better rental yield returns|
At the end of the day I am not your financial advisor. Actually I am not a big fan of Bitcoin. I choose real estate for generational rental income and for price appreciation. Yet Bitcoin is a good option to keep for short terms uptrend and push for investing. I brought my first home to invest in and use it for rental yield. To keep my cash flow that I know my returns every month and year. I want to compare to tell you the difference.
Before I choose to invest and buy my first home. The first ever calculation I did was to consider should I rent or buy. To further check out your first investments or even second. You can click the button below for rent vs buy calculator.