If you want to earn passive income, investing in crypto or stocks are two options you may have to try. Each of these has its pros and cons that you need to know about before choosing which one to go with. If you are trying to choose between the two or when to invest in any of them, this article is for you. We shall share all the benefits and shortcomings of each to make it easier for you to decide.
Investing in stocks
With investing in stocks, you can either buy stocks of an individual company through stockbrokers such as Fidelity or invest in mutual funds offered by investment companies like Vanguard. The less risky choice of the two is investing in mutual funds because they spread your investment across various fortune 500 companies.
However, investing in individual stocks is an option short-term investors may consider because it has way more returns if done well. For example, someone who invested in Tesla stocks between 2020 and 2021 will have earned over ten times their investment within a space of 12 months. The only challenge is being able to predict the potential stocks that could bring such returns.
Investing in cryptocurrencies
Investing in cryptocurrencies involves buying digital currencies such as BTC, ETH, Dogecoin, and many more. Unlike the stock market, the crypto market is very volatile; we have seen cryptocurrencies like Solana increasing in value by over 50X in just one year. In the crypto world, it is possible to get a 100% increment or decrement in value in a space of 24 hours.
If you want to invest in cryptocurrencies, you will have to sign up on crypto exchange platforms like Coinbase or Binance. It is through these platforms that you can use your fiat to buy crypto. These platforms also offer educational resources such as the previous performance of a given currency to help investors make the right decisions.
Pros and cons of investing in stocks
- They are more stable than cryptocurrencies, making them an ideal choice for anyone whose aim is to earn small without taking a huge risk.
- Stocks have a long history of solid gains.
- More accessible. Investing in stocks is much easier today than ever before
- Stronger regulation. The stock market is heavily regulated by governments, making it hard for scammers to infiltrate it.
- Minimal potential of extreme gains. If you are looking at getting extreme gains, then investing in stocks is not for you.
Pros and cons of investing in crypto
- Potential for extreme gains due to the rapid growth in prices
- The number of coins to invest in is ever-growing
- There is a growing interest in crypto, which could further increase their value in the future.
- Extreme volatility can also lead to huge losses if you don’t closely monitor the market.
- The crypto market hasn’t stood a test time, so it is riskier than the stocks market.
- Limited regulation makes it easier for scammers to infiltrate the crypto market.