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Cryptocurrency, or ‘crypto’ as we more commonly know it, has been an emerging investment trend for many due to its reputation of generating large returns in a short amount of time.

As it has received extensive interest from investors, particularly from those who can’t quite crack the property market, the question still remains as to whether it truly is the better investment option.

In this article, we take a deep dive at the pros and cons of investing in property or cryptocurrency to help you along your personal investment journey.

What is Crypto?

Cryptocurrency, or ‘crypto’ for short, is a digital, encrypted, and decentralised currency that is stored in a crypto wallet and used to send and receive crypto transactions.

Is Cryptocurrency Worth Investing In?

Investing in cryptocurrency presents an opportunity for quick financial gains. Many traders will look to ‘pump and dump’ exiting the market at exactly the right time and leverage off of its volatility, sometimes only holding the asset for one to two days. Other traders will enter the market with long term strategies in mind, investing in coins which have proven their resilience and consistency over time.

For instance, Bitcoin doubled and more in the first four months of 2021, while other coins experienced daily gains of over 200%.

However, while the level of volatility in cryptocurrency can be beneficial, it can also be detrimental for investors as coin values can drop as fast as they can grow in very short periods of time.

For example, between April and June in 2021, Bitcoin saw a drop in value of over 50%, and has dropped 70% from its January 2022 high.

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Cryptocurrency is also not a tangible asset, which can cause issues for investors for a number of reasons. One being that crypto is not yet a widely accepted form of currency exchange and cannot be spent in the majority of physical stores, online transactions etc. Another being the risk of losing your coins altogether. For cryptocurrencies such as Bitcoin, tokens are stored in a digital wallet that is protected by a private key. If you lose your key, or if your computer hardware fails, you will lose your tokens which cannot be recovered.

Cryptocurrency may appeal to certain types of investors, but for those seeking a safer, more reliable investment strategy, property has proven to be better-suited – and here’s why:

Property Is One Of The Safest Ways To Invest:

Property is considered as one of the safest and most consistent investment options. There is always a need for property as people will always need a place to live. As a tangible asset, its value is determined by what it is objectively, not by what value people attribute to it. At AllianceCorp, we tend to leverage the ‘buy-and-hold’ investment strategy as it provides a low-risk, high return framework over an extended period of time.

Property Has A Constant Growth Factor:

Property has a constant growth factor. The continuing demand for housing in key markets in Australia is fuelled by strong population growth, ensuring property prices are supported. Even when a market experiences a correction period, the investment can be sustained until the values increase again. This level of control is not possible when investing in crypto or in shares.

Government Incentives:

One of the biggest incentives for investing in property is the ability to minimise your tax. Many of the expenses involved in an investment property are tax deductible, including borrowing expenses, interest, maintenance and agent fees. As long as the loan costs are greater than the rental income, the Australian Taxation Office will allow investors to offset the loss against their income. This strategy, known as negative gearing, is often considered more of a tax strategy than an investment one.

While both investment options provide a number of benefits, knowing which strategy will suit your circumstances best largely depends on your financial position, your goals and your risk profile. If you’re interested in learning more about property and receiving a wealth creation strategy tailored to YOU, simply fill out the form below for a FREE, no obligation strategy session with one of our Senior Property Wealth Planners today!

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