Afraid to invest in crypto? Here’s why stocks may be a better bet
You may find it easier to control a stock than a given digital coin.
- Cryptocurrency is a fairly new investment, and a speculative one at that.
- You can take solace in the fact that some stocks have been around for more than 100 years.
- You may also have an easier time evaluating companies than evaluating digital coins.
More than 84 million people hold cryptocurrency, as of US News & World Report. So if you’ve been feeling the pressure to add crypto to your investment portfolio, it’s understandable. And if you’re afraid to do that, well, that’s understandable too.
While stocks are a risky enough asset on their own, crypto tends to be far more volatile. And so the value of your portfolio can fluctuate even more wildly if you add crypto to your personal investment mix.
But volatility isn’t the only reason you might want to choose stocks over crypto. Rather, you can take comfort in the fact that stocks can be much easier to research and have been around much longer.
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A fairly new investment
At this point, crypto has become so mainstream that it’s easy to forget how new it is. But in fact, Bitcoin, the first form of crypto, was only launched in early 2009. That means if crypto was a US citizen, it wouldn’t even be old enough to vote.
In contrast, many of the companies whose shares are traded today have existed for over 100 years. Take Procter & Gamble for example; it was founded way back in 1837. Similarly, Johnson & Johnson was founded in 1886.
Now there are obviously many newer companies that you choose to invest your money in as well. The bottom line, though, is that the oldest crypto is only a teenager, so it’s hard to know how much staying power the digital currency has. But it’s fair to say that many of the companies that trade publicly today are not on the verge of disappearing, based on the fact that they have already proven their ability to last.
A question of value
When buying stocks to add to your brokerage account, it’s important to make sure they’re a solid bet. What you usually want to look for are stocks that offer a lot of value, or good value for the share price. Likewise, you want your stocks to have the potential to gain a lot of value over time. And there are different metrics you can use to see if a given stock is a good choice.
Firstly, you can look at earnings. Listed companies must publish earnings so that investors can see what they are getting into. You can also take a look at a given company’s cash flow and debt to get a sense of how well it’s doing.
There are other metrics you can also look at to see if a stock is worth the price it’s trading at, including earnings per share. With crypto, it is difficult to determine whether a given currency is trading at a fair price and whether it is worth the price at hand. That’s because digital coins aren’t businesses – they’re an asset whose value largely depends on what investors want to pay at that moment.
Go with your gut feeling
Some people have had a lot of success with crypto. But if you feel it’s too risky, there’s really no reason to put your money into it. There are plenty of other assets you can load up on that can help you achieve your financial goals, so there’s no point in taking a risk on a newer, more speculative asset you’re just not comfortable with.
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