Property Vs Bitcoin – what’s the best investment?

In this article, we explore the considerations of investing in cryptocurrency vs property. We are unashamedly property people; we love property because it is not as volatile as the share market and has historically stood strong in times of turmoil. However, with the new kid on the block, cryptocurrency, we are happy to review our stance on property and consider the merits or pitfalls of other investment options.

If you’re considering an investment in property or bitcoin, or any other cryptocurrency or physical or virtual asset, it’s important to realise it’s not about getting the secrets to “win big”; it’s about leveraging cumulative knowledge and expertise and applying it to your situation and risk profile. The success of your investment will depend on what you are able to invest, the certainty and the returns.

You can make money on any asset at any time if you know what you’re doing. People can make money on Bitcoin, but can YOU make money on Bitcoin? People can make money on property, but can YOU make money on property?

Essentially it all comes down to risk. All risk comes from lack of knowledge. How much do you know, or can you know, about each of these investment options? To increase your knowledge and reduce your risk, go to those that have the knowledge, experience, research and solutions and a proven track record.

The best investors have a strategy based on research and insight, and they take calculated steps to activate that strategy while reducing their risk. Rarely do people succeed on their own; they seek out help to understand, achieve and reduce risk.

The Risk in Investing in Bitcoin or another Cryptocurrency

When we look at the risk associated with investing in Bitcoin, we consider how much do you know and how much can you know about Bitcoin. What we know is Bitcoin is a sub-currency and follows a decentralised structure, not having to abide by any law or regulations. It’s not in many countries’ interest to have a second currency operating and this will always be a challenge and a threat to Bitcoin. We also don’t know who created Bitcoin, all anyone knows is a name and no one is sure if that’s the name of one person, a team or just a pseudonym of either. Why is it no one is taking credit for it? Risk comes from a lack of knowledge and there is much knowledge lacking here.

If we look at celebrities who invest in cryptocurrency, what is the risk to them to put $1M into a relatively unknown commodity? What is the risk to you to lose $100,000 on the same investment? When someone takes another person’s context and applies it to their own situation without scrutiny, research or expert advice, that’s the answer to how people lose money.

Speculation: A widely discussed topic surrounding Bitcoin is that there is going to be a crash, or the cryptocurrency bubble will burst in 2021. From media to finance experts, many are talking about the great fall to come after the quick rise to fame and fortune for cryptocurrency.

Prediction: We expect Bitcoin to hang around beyond 2021 but we expect the values will dramatically fluctuate over the next few years showing boom and bust a few times over before many leave this unpredictable investment option for other safer options.

Risk Vs Return: There is incredible risk in investing in bitcoin or other cryptocurrencies, but the return could be equally dramatic. Those that time it well by luck or insight could make great fortunes but could lose them just as quickly.

Takeaways: This investment option is good for risk takers and short-term investors, but not for those who have a lot to lose and want to wisely invest for their retirement.

Considerations for investing in property

When we look at property, what we know is that historically residential property has been a forgiving asset class, even for those that dabble without a strategy or have had to ride through financial storms or other national or global upsets.

When turmoil hits, it’s often property that holds its value, and it’s been property that governments have relied upon to reinvigorate an economy – such as the Australian government’s decision to use new home construction and property incentives to stimulate the Australian economy following the economic impact of COVID19. Why did the government choose property as the vehicle to reset the economy? Because it’s an asset that works.

There’s a reason more millionaires are still made today though property than any other form of investment. Because it’s an asset that works.

Those that do well in property investment take into consideration multiple factors such as the type of built form in a particular region that will ensure the best rental return and capital growth that combine to make a solid return on investment over time. Turning to experts with insight into trends, demand, supply forecasts and a proven track record enables property investors to make the most of their investment with limited risk.

Speculations: Right now, more property markets across Australia are rising and many are speculating that this is a ‘boom’ that will ‘bust’. Some believe that with interest rates at an all-time low encouraging people to invest in this asset class, they think that the RBA will hike up the rate to correct the market and investors will be in trouble.

Predictions: We believe this isn’t a ‘speculatively’ driven market rise. It’s driven by owner occupiers and first home buyers. At a macro level, we believe it’s more likely to flatten out and stay that way for an extended period of time. We also believe that some markets won’t flatten and will instead out-perform, such as the Sunshine Coast property market in Queensland. We believe it will be the leading residential property market for some time to come. It is predicted to continue on in a protracted upswing for the next 5 to 10 years and perhaps even further depending on the outcomes of the Olympic bid for 2032. We predict that interest rates won’t rise for a few years and will only be in line with the economic growth and employment rates of the country which should mean that investors aren’t stuck holding the bag but will be able to adjust rents and repayments appropriately.

Risk Vs Return: The risk to invest is much lower than other asset classes and there’s a history of solid performance with greater reliability, especially during times of crisis. The return is not always as immediate as other asset classes but has the ability to provide consistent income as well as growing in value, and depending on the property type, there are tax benefits that will help with your cash flow as well.

Summary

If you want to make a good investment, we encourage you to do your due diligence, reach out to experts who have the insight to help you reduce your risk by increasing your knowledge. When you know more you can make more informed decisions and have confidence in choosing to take calculated risks instead of blindly trusting risky choices.

If you want to learn more about property, we encourage you to download our free research book here and book a free coaching session with our property coaches.