Are you looking to invest in something that’s not tied to physical currency? Many people are looking to do this to hedge against inflation. This is generally why you will find gold as an asset spiking in price when inflation is rampant. While they might not have much practical value, they are relatively good investments if you want to hedge against inflation or simply bet on them going up.
Reasons To Invest In Gold and/or Bitcoin:
1. Diversification (Gold and Bitcoin)
One of the keys to any successful investment portfolio is diversification. While you might not get rich by spreading yourself too thin, you can reduce the risk of your portfolio by doing it. Adding both gold or Bitcoin to your investment portfolio can help to hedge against both inflation and potential market crashes. No one wants to see their net worth decrease by double-digit percentage points anytime the market decides to sell-off. This is why you want something other than stocks in your portfolio. While gold doesn’t beat the traditional returns from the stock market, it’s something that has held relatively stable over the long term. Bitcoin on the other hand is another extremely volatile asset but it can be a good one to add to your portfolio for the sake of diversification. You just have to be ready to have the value of your assets be increasingly volatile over the short term.
2. High Returns (Bitcoin)
One of the main reasons a lot of investors are flocking to Bitcoin and other cryptocurrencies is due to the high rate of returns they are offering. Cryptocurrency as a whole has been extremely volatile over the past 20 years. However, Bitcoin has managed to far outgain that of the S&P 500 hitting an all-time high of $63,000 in mid-April . Bitcoin has proven to be a good place to store value to diversify one’s portfolio in times of an economic crisis but it has proven to be very volatile. For the average investor, it may be a little too volatile. However, for those interested in growth investing, cryptocurrency has a very good place in one’s portfolio.
3. It’s Becoming More Widely Accepted (Bitcoin)
Bitcoin has gained a lot of traction that helps enhance its overall outlook as an investment vehicle. The fact is, more and more banks and businesses are accepting it. For one, Tesla bought $1.5 billion worth of Bitcoin and they made preparations to accept it as a method of payment for its vehicles . Likewise, investment banks like Morgan Stanley started offering their wealthy clients access to Bitcoin funds . Also, El Salvador recently became the first country in the world to make Bitcoin a legal tender . Therefore, it’s a matter of when and not if cryptocurrency will be widely adopted across the globe.
4. Limited Supply and Increasing Demand (Bitcoin and Gold)
Bitcoin peaks a lot of investor’s interest because of its limited supply and high demand. It’s an asset that is capped at 21 million Bitcoin’s. Therefore, there is a fixed volume that you don’t have to worry about increasing ever. This is something that would in theory help to keep driving up the price of Bitcoin as an asset. When it comes to gold, there are times when gold is limited in supply which can drive up the price of the asset. After all, it can take nearly 10 years at a time to bring a brand new mine in production . With gold being in limited supply and with demand increasing, the asset is poised to rise in price.
As you can see, there are plenty of things to like about both of these as assets for your portfolio. If you are looking to invest in something to diversify your portfolio, they both serve as a good alternative investment. Investing in gold is something you will want to do if you are looking to hedge against the current state of the financial system. Whereas, cryptocurrency like Bitcoin is a good way to get ahead of the curve by investing in a transformative technology that promises to be the currency of the future. Neither is a risk-free investment, but they are both solid for the right investors.