Crypto Investing
5 Dec 2021

Crypto vs. Traditional Assets: Which is the Ultimate Wealth Creator?

Ananda Banerjee

Key Takeaways

  • Financial investment thrives on research 
  • Asset class signifies a specific set of assets grouped as a standalone unit.
  • Different asset classes aren’t correlated and have different financial standards influencing them.
  • Crypto assets are the ultimate wealth creators.
  • Investing in Crypto, stocks, and commodities need a proper understanding of technical and fundamental analysis.
  • Mutual funds and ETFs are safer investment strategies and still manage to offer high returns.
  • The commodity space is highly regulated.
  • How Crypto is a better investment decision, compared to others

Money-making is an art. And, as an artist, you need to find the perfect muse to create wealth. From a financial perspective, motivation relates to the type of investments you are willing to make. But then, investments aren’t as straightforward as financial advisors project them. Instead, they are subjective, time-dependent, and most importantly, based on your risk appetite. 

As an enthused investor in 2021, your first step towards putting money in a specific financial instrument should be driven by research. And that is precisely why we are having this discussion. Plus, in an era where Cryptocurrencies are being transacted like fads, it is important to get the facts right to ensure that you get the most out of your moolah. 

In the next few sections, we will help add to your DYOR (Do Your Own Research) skills when it comes to finding the perfect investment opportunity. We would aim to enlist some of the best asset classes and sub-asset classes for you to consider while going long with your financial decisions.

Well, it’s better to cut this initial discourse short as we feel that terms like asset class, sub-asset class, and DYOR might be a tad overwhelming at this point. But don’t sweat over these terminologies for now. CoinSwitch Kuber has you covered!

Investment Assets in 2021: How to Pick the Perfect Asset Class

Every financial investment has a simple objective. That is, to make money. How the instrument goes about achieving this objective is an entirely subjective attribute! To understand investments better, you would first need to get the hang of a term called ‘Asset Class.’

An asset class denotes a specific category of investment, underlined by comparable growth rates, risk factors, volatility, taxation, liquidity, and tenures. Therefore, as an investor, you must be sure about the asset class before moving to the sub-assets. Subsequently, sub-assets are the more specific financial instruments pertaining to the given asset class.

Still confused!

Well, here is a more simple representation en-route. Imagine yourself investing in the stock market. You can either trade the index, derivatives, or shares of the specific company. Each financial instrument belongs to an asset class, termed as Equities

Similarly, other asset classes in India include commodities, properties, cash, and bonds. By now, you must be aware of how asset classes are defined, and at this point, it is appropriate to address the elephant in the room, i.e., the cryptocurrency.

Is Crypto a Reliable Investment Asset?

Most certainly, as the crypto-space is loaded with possibilities when investment opportunities are concerned! While the apparent volatility makes it a tad questionable for short-term trading, Crypto, as an investment, has the possibility to push your financial stead through the roof. But then, for investing in Crypto, you must be willing to put in those hard yards when fundamentals and technicals are concerned.

Crypto vs. Other wealth creators

Knowing the crypto player, in and out, via fundamental analysis and technical analysis is what lays the foundation of a Do-your-own-Research culture, something that new investors must take quite seriously. 

Different Investment Assets available in India

As an investor, your first instinct should be to diversify assets. While you can always take up a particular asset class and consider the investment opportunities, this diversification can overpower new investors.

But then, there is more than one way to skin the cat. So instead of delving into the types of asset classes, we would focus on different investment assets, mainly for the sake of simplicity.

Here are some of the assets that a prospective investor can consider:

  • Digital Assets
  • Mutual Funds & ETFs
  • Bonds
  • Retirement Plans
  • Commodities

Digital Assets

If you are into specifics, digital assets can be categorized further into Initial Coin Offerings and Cryptocurrencies. In the case of ICOs, it is often the concept you put your faith in. For cryptocurrencies, investing is about having faith in value appreciation and market potential.

Pros

  • Massive wealth creator
  • Choices galore
  • Option to invest in NFT tokens 
  • Allows you to ride the boom

Cons

  • Volatile space
  • Needs good levels of diligence

Stocks

Investing in both Indian and global stocks is like devoting funds to a particular organization while being upbeat about its growth potential. In terms of volatility, the crypto-space can only be rivaled by the stock market. However, investing in the stock market is a multifaceted opportunity, where you can put money in derivative options or create specialized index funds to diversify the same at an elementary level.

Pros

  • High liquidity
  • A wide number of possibilities
  • Higher rate of return

Cons

  • Prone to oversight
  • Requires technical acumen to succeed

For detailed information, check out stocks vs. cryptocurrency

Mutual Funds & ETFs

One of the more popular financial instruments, Mutual funds and Exchange Traded funds, are more like fund pools, with the cumulative sum being used by fund managers to invest in specialized securities, bonds, or other primary instruments. In simpler words, these funds take your money, pool them, make profits, and then pay you a part of it.

Pros

  • Diversified investment asset
  • Transparent
  • Minimal risk
  • Good liquidity

Cons

  • Higher overheads
  • Not fit for investors with a higher risk appetite

For more information, check out Mutual Funds vs. cryptocurrency

Bonds

Better termed as debt securities, bonds are more like lending money to corporations, municipalities, and governments for a fixed rate of return. Despite being low on thrills, bonds are decent resources to diversify your portfolio.

Pros

  • Fixed returns
  • Lesser risk exposure
  • Can be selected based on ratings

Cons

  • Large investments are needed
  • Low liquidity

Retirement Plans

If you plan to save for your distant future, i.e., when you retire professionally, investing in NPS (National Pension System) is a good way to start. While most analysts do not consider this as a particular investment, we feel that planning proactively for retirement is as important as saving for a house. 

However, if you want to go high on liquidity and fixed income schemes, annuities are better choices, courtesy of the low-risk profile. 

Pros

  • Decent returns
  • Long-term fixture
  • It covers you for the future

Cons

  • Underwhelming liquidity
  • Withdrawal limits in place

Commodities

Investment assets that are quite popular in the futures market, Commodities are volatile and capable of being manipulated by the global market. Also, it is a hugely regulated space with regulations placed at every corner. Well, we are already missing cryptocurrencies now!

If you are interested in investing in Commodities, there are four broader sub-asset classes to consider, including Metals, Energy, Agricultural Products, and Livestock and Meat.

Pros

  • Diversified asset class
  • Transparent space
  • Not manipulated by inflation

Cons

  • Leveraged space
  • Volatile

Apart from the mentioned investment assets, you can even consider insurance, bank fixed deposits, real-estate or properties, and certificate of deposit or CD, depending on your affinity or repulsion towards risk-taking. 

How do these Assets fare against Crypto?

Investing in Crypto still seems like a plausible bet when compared with each of the mentioned assets, as it strikes the perfect balance between growth and stability. Surprised?

Yes, despite the scores of bubble-bursting claims floating around, the crypto-space is still a reasonably safe form of investment, provided you have taken care of the due diligence. Plus, the existence of Smart Contracts, a decentralized Blockchain setup, and an advanced payment structure, is something that inspires further confidence.

Plus, if you want to actually grow the corpus and not restrict yourself to pocket change, you should be ready to embrace the Crypto future as early as possible. 

FAQs

Q1. Which type of investment is the best?

A1. Instead of picking up a standalone asset to invest in, we would recommend diversification. Our preferences include a corpus made out of digital assets, equities, retirement plans, and mutual funds. 

Q2. Which investment has the highest rate of return?

A2. The crypto-space, without a shred of doubt, offers the highest rate of return, especially if used only as an investment instrument. 

Q3. Which is the safest investment with the highest return?

A3. Instead of singling out assets, portfolio diversification is a good way to guarantee decent returns without safety concerns. But then, if better appreciation is on your mind, Crypto can be a reliable option for the promise it holds. 

Q4. Which share is the best to buy at this time?

A4. If you are planning to invest in stocks, for now, Consumer Durables make a pretty good case. However, considering the market volatility, price saturation, and presumed erratic behavior of consumer cyclical, we would ask you to consider investing in the crypto space.

Planning to try Crypto out as an asset class. Download the app and get started right away.

Disclaimer : Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. The information provided in this post is not to be considered as investment/financial advice from CoinSwitch. Any action taken upon the information shall be at user's own risk.

writer

Ananda Banerjee

Content Writer

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