When you have money to invest, it is really hard to know what the best option is. Should you go with something safe that may give you less bang for your buck, or something more unstable like Crypto, but that can give you higher yields? Here are some factors to consider.
Buying cryptocurrency and saving your money in the bank both have pros and cons. While bank savings are FDIC-insured, crypto investments like Bitcoin have no guarantees. The number of crypto users in the world is projected to reach 328 million by 2028. Forbes recently reported that the industry’s market average revenue per user is expected to hover around $1.5 in 2024. Cryptocurrency makes up 31% of the next generation investor portfolio. This post will discuss crypto investment vs. keeping your cash in the bank.
How to Determine Whether to Keep Your Money in the Bank or Invest in Cryptocurrencies
From volatility to financial protection, industry regulation, and supply, crypto is different from fiat currency in many ways. Cash is a centralised national currency that is created, backed, and managed by the government. On the other hand, crypto is a decentralised digital currency that eliminates the need for third parties. All an investor has to do is set up a crypto wallet to transact live on the blockchain. Considering these tips can help you determine whether to dive into the crypto bandwagon or save your cash in the bank.
Weigh Your Risk Tolerance
One vital factor to consider when deciding about buying crypto or saving with a bank is to assess your risk tolerance. Risk tolerance is the extent to which you are ready to sacrifice your money when considering the potential volatility of the financial decision. Saving your money in the bank is overall much safer than investing in crypto. Volatility of stock, market swings, geopolitical tensions, and interest changes can affect your tolerance for risks. Greater risk tolerance is often associated with exchange traded funds (EFTs), stocks, and equity funds. You risk losing your money in a market crash if you invest in highly volatile crypto like Bitcoins without monitoring the market trends of the popular digital currency.
Know Your Financial Goals
Defining your financial goals clearly can help you decide the right time to buy Bitcoin or save your money in the bank. Depending on your unique situation, your financial goals may center around buying a new car, planning for retirement or acquiring a house. If your ultimate goal is to purchase bitcoins instantly and sell to make a profit when the price rises, you will likely opt to use trusted physical exchanges such as NakitCoins. On the contrary, those who hope for better returns on their money can achieve their goals with savings accounts that accumulate interest over the long haul.
Consider Inflation
Inflation is one factor that discourages people from keeping their money in the bank. Investing in crypto is a good idea to safeguard your money from the impact of inflation. The U.S. dollar has lost almost 25% of its value in the last couple of years, leading many to consider investing in cryptocurrencies. Bitcoin is once again a strong force to reckon with, and many experts believe now is the right time to invest in crypto. American businessman Mark Cuban recently admitted that he would choose Bitcoin investment over gold any day because of the upward trajectory of the crypto asset.
Hopefully, these tips have helped you make a better decision concerning whether to try a crypto investment or keep your money in the bank.