Real Estate or Bitcoin? Which is the Better Investment of Your Money?
For probably the last decade Bitcoin has been growing in popularity among investing opportunities. It has been an especially popular topic of investing in the last 2 years. But is it actually a good use of your hard-earned money? How does it compare to investing in real estate?
Is it Better to Invest in Real Estate or Bitcoin?
How bitcoin has performed from January 2, 2021, to July 21, 2022
To better determine which investment is better, bitcoin or real estate, it is a good idea to make an example scenario comparing investing the exact same amount of money in both investment worlds. Let's say someone invested $10,000 in bitcoin beginning in January of last year and another person decided to take their $10,000 and invest it into real estate.
According to Benzinga, one single bitcoin was trading at $29,405 on the date of January 2, 2021. This means that if someone invested $10,000 into bitcoin it would have purchased 0.34 worth of bitcoin or what is considered to be slightly less than a third of a coin.
Since January of 2021 bitcoin saw strong gains for most of that year. It shattered its own high record on a number of occasions throughout 2021. The peak was reached in November 2021 when the valuation of that $10,000 bitcoin investment would've been $67,553.95. This made bitcoin investors very happy with the decision they have made. Many bitcoin investors used their money to reinvest into more bitcoin.
This is a common response to something that has shown lucrative gains in the investing world. Most investors adopt this investment strategy in all forms of investment. But what goes up must come down and it is a cliché for a reason because it has shown to be true time and time again. Not long after this November 2021 peak, the first stages of inflation began to hit the economy and the Federal Reserve started hinting at interest rate increases.
This is when things began to get rough with bitcoin investing. Since the end of the month of November 2021 investing in bitcoin has been seen as nearly stagnant. Bitcoin has dropped below $20,000 before making a slight upturn of the current value of $21,536. This means that currently, $10,000 worth of bitcoin is equal to 0.29405 bitcoin. This is much less than it was worth in January 2021. This means that the person that invested $10,000 in bitcoin in January 2021 now has an investment that is worth only $6332. This is roughly a 37% decrease in your investment dollars in just over a year.
Using the $10,000 example for investing in real estate beginning in January 2021
Sticking with our example to make it simple and straightforward now let's look at how the person that invested $10,000 into real estate in January 2021 is doing currently. Instead of investing in bitcoin this person took their $10,000 and put it into Flagship Real Estate Fund.
Flagship Real Estate Fund works like a normal investment and because it is not cryptocurrency you don't have to convert your monetary investment capital into any other monetary unit. This fund is a non-traded real estate investment trust or a REIT. It has a stated goal of providing passive income for investors and giving them the ability to benefit from the appreciation of the value of the assets in the fund. ( these assets are real estate properties)
This REIT has assets consisting of single-family rentals, multi-family developments, and commercial properties. According to this fund's historical performance data, the $10,000 originally invested in January 2021 would currently be worth $13,515 as of the end of July 2022. This means that the person deciding to put their $10,000 into real estate investment has increased their worth by 35%. While this is not as high as the large gains investors saw from bitcoin when it hit its peak it is a much better advantage in the long run over where bitcoin currently has gone.
Investing in real estate over other opportunities is like a tortoise and the hare story
When it comes to investing in real estate rather it is through a REIT which is completely passive or owning actual real property by purchasing a rental home in some form; slow and steady wins the race. Even when you go to purchase your own primary residence you gain equity and wealth in the property over a longer period of time.
Investing in real estate in any form has always shown to be a solid and trustworthy investment as long as you plan to hold onto that investment for a significant amount of time. In the investing world real estate is the tortoise that stays true and steady with time and ends up with the bigger payoff.
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