Investing is no longer an activity that the richest do to increase their market values. Nowadays, even small households are taking the plunge to improve their quality of life and secure a better future. The options are varied: stocks, funds, bonds … Something to suit all profiles. Today, we’re looking at the hottest investments right now, cryptos and real estate!
Crypto vs Real Estate: which is the best decision? We tell you everything!
Advantages and disadvantages of investing in cryptocurrency
Did you know that only 5% of French people have BTCs? Reaching a record rate of $ 30,000 on January 2, 2021 (Today she wants $ 34,000), the currency has aroused the curiosity of the most skeptical.
Buying Bitcoins can be a good investment, as long as you know the ropes of trading. If you are a beginner or are afraid to go for such a large coin, other altcoins are available. Here is a top 5 of the most promising alternative currencies in 2021:
- Bitcoin Cash (BCH): Based on Bitcoin, Bitcoin Cash benefits from fluctuations in the latter, but with a more fluid network.
- Ethereum (ETH): BTC’s first rival, it offers lower fees and lower volatility.
- Ripple (XRP): Very low cost transactions and its open source nature have won over many large financial institutions such as Crédit Agricole.
- Litecoin (LTC): functioning like Bitcoin, this crypto offers all the advantages of the latter, with better speed and transaction fees.
- Binance Coin (BNB): Linked directly to one of the world’s largest trading platforms, this altcoin offers great credibility and lower trading fees.
Before you get started, it’s important to study the crypto market as a whole.
Benefits of cryptocurrency
Encrypted currency is not regulated by an organization, such as the European Central Bank does for the euro. Traditional currency transactions are carried out and validated by your financial service provider, which in turn guarantees the correct validity of the exchanges.
Cryptocurrency, on the other hand, is decentralized. It is therefore not subject to a control institution. This is why transactions are faster and can be done at any time. Contrary to what one might think, transactions are also more secure, as it is the users themselves who must validate them.
Cryptocurrency caps show that they truly are the future of global finance. These borderless currencies could be the solution to the great instability of traditional currency exchanges and often disadvantageous exchange rates.
Disadvantages of cryptocurrency
No investment is 100% guaranteed. The loss of capital is a risk factor to keep in mind.
Volatility is the main drawback in crypto trading. Sometimes it only takes a few hours for a crypto to break records, or to drop altogether. Investing in cryptos should be done for the long term, in a thoughtful way.
Despite the security that cryptos boast, scams are nonetheless prevalent. These mainly result from the purchase of your tokens without supervision. The transactions themselves are secure, but that doesn’t stop scammers from stealing your money. It is necessary to choose reliable and recognized platforms for all your exchanges.
On the same line, hackers are also a danger. All internet-based activity must be secure. Solutions are available, such as Ledger Wallets.
Advantages and disadvantages of investing in real estate
Unlike cryptocurrencies, real estate remains a more traditional investment and less scary for most. With the current health crisis, this is one of the sectors that stands out the most.
Advantages of real estate
Real estate, and especially rental property, is undeniably profitable (between 2 and 7%). In addition to ensuring a regular inflow of money, you also constitute a heritage that can be passed on to your children. This is the ideal option for investors looking for some stability.
The tax benefits are sure to catch the eye. The Pinel law is a tax reduction for tax-resident investors in France. It relates to :
- New or soon to be completed housing;
- Old housing that has undergone renovations or rehabilitation work;
- The premises are transformed into housing.
The tax reductions in question vary between 12%, 18% and 21% reduction, depending on the initial rental period planned (6, 9 and 12 years, respectively).
Leverage is also an advantage that you can play with. If you have a stable salary (from 1500 euros per month), you are entitled to a mortgage.
The option of SCPIs (Société Civile de Placement Immobilier) is also very advantageous. It’s a way to invest in rental real estate and enjoy a regular cash flow, without having to go through all the management behind it. The pooling of risks makes it possible to avoid non-payments. Unlike simple real estate, with a REIT you get a percentage of a set of properties. Even if one of the tenants is late, the others will provide enough to receive your share.
Disadvantages of real estate
Some of the weak points of investing in real estate include:
- The volatility of real estate prices and instability from one region to another;
- The difficulty of finding a tenant, as well as all the constraints of a rental investment, such as delays and non-payments;
- Rental real estate requires a lot of management and involvement. Poor management will quickly be felt.
Real estate and cryptocurrencies are two great options if you want to invest.
Real estate is more beneficial for people looking for financial stability and wealth for their future. Many benefits flow from this, including tax reductions.
Cryptocurrency is more suitable for seasoned investors who want to diversify their assets and who like to take risks.
In both cases, it is important to take into account the common risk factor: loss of capital. Investing is a decision that must be considered and well anticipated.
Source: Financial Afrik