Right now, I’d like to take a few moments to definitively determine which is the best investment. Is it better to pour your hard-earned money into cryptocurrencies? Or should you continue to plow your wealth into the stock market?
From an investment standpoint, I can tell you the better alternative is always the one that makes the most money! But that isn’t always the only driving force that helps you choose one investment over another.
So, I’ll look at cryptocurrencies and stocks in a few critical areas and determine which one is the best investment.
Sound good? Keep reading to discover the ultimate truth.
Which Investment Is Most Susceptible to Outside Forces?
In our first example, it seems wise to discover which style of investing is most susceptible to outside forces.
What do I mean?
Well, a major advantage of buying Bitcoin and other cryptocurrencies is they have a finite number of digital coins.
As an example, there will never be more than 21 million Bitcoins in existence at any given time.
Can you make the same claim for stocks? Absolutely not!
As a matter of fact, the publicly traded company SOS Limited ADR announced a $125 million equity offering today. They offered these new shares at an 11% discount to the previous trading price at five dollars per share.
So, when investors woke up this morning they were in for a rude awakening. Their shares were worth much less (more than 11%) then they’d been at the previous close.
Why?
The company decided to raise money at the expense of their current stock price. And because they raised capital, they diluted their shares and lowered the overall value of each individual stock.
This is never going to be an issue with a Bitcoin and other cryptocurrencies. As I said, they only issued a finite amount. Bitcoin is 21 million. The same with Bitcoin Cash. Other cryptocurrencies have issued more digital coins, but it’s still a set amount.
Investors never need to worry about some corporation, or government, or the Federal Reserve diluting the value of their cryptos.
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Which Investment Strategy Has Made the Greatest Returns Over the Past Year?
Over the past year, it doesn’t take a genius to see that cryptocurrencies crushed stocks from a value standpoint. And the crazy thing is the stock market also performed extremely well during most of this time.
But there really isn’t even a real contest at this point. Bitcoin and other cryptocurrencies crushed the Dow Jones, the S&P 500, and the NASDAQ.
Right now, the current year-to-date returns include:
- Bitcoin – 102.33% gain
- Ethereum – 148.70% gain
- Bitcoin Cash – 53.62% gain
- XRP – 154.45% gain
- Litecoin – 58.31% gain
- Chainlink – 151.70% gain
- Dow Jones Industrial Average – 50.57% gain
- NASDAQ – 68.99% gain
- S&P 500 – 52.80% gain
As you can see, the markets have been doing phenomenally well throughout the past year. The stock market and the cryptocurrency markets are on fire.
But as you can also see, there’s a pretty big discrepancy in percentage gain.
Bitcoin earned twice as much as the DJIA. And other investments like Ethereum, Chainlink and XRP earned three times as much.
There’s only one instance where a stock market index beat cryptocurrencies. The NASDAQ beat Bitcoin Cash and Litecoin by an average of 13%, which is a pretty healthy return.
But overall, I’d say it’s clear that investing in cryptocurrencies is the superior way to earn massive returns.
And the best way to do it…
Open a cryptocurrency IRA. This account allows you to earn tax-free or tax-deferred profits for the long-term. You’ll maximize your money and set yourself up for a happy and carefree retirement.
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Which Investment Strategy Experiences the Biggest Impact from Globalization?
For the past 30 years, the US stock market really benefited from globalization. US companies spread throughout the globe and grew by leaps and bounds. Plus, historically it’s been safest to invest your money in US companies.
This has caused investors from around the world – like rich nations that produce oil – to invest their money safely in the US stock market.
But there’s a problem. Globalism is on the verge of causing the US stock market to become the next big loser.
Why?
Countries like India, South Africa, China, and Brazil are all growing rapidly. And because of their rapid growth environment, it makes sense to invest in the companies in these nations because of potential big returns.
Overall, globalization played a huge role in growing the US stock market over the last 30 years. But when it comes to the next 30 years, I wouldn’t be so certain that it’s going to help.
In fact, the increased competition due to globalization means new companies will become a very profitable in the years to come. And with the massive tax burdens that President Biden plans to push on US corporations, big businesses will retreat soon.
Other countries will create businesses to step up and become the biggest worldwide producers of certain goods and services.
How about cryptocurrency?
Cryptocurrency is in a different situation altogether. This currency is used worldwide and it’s being adopted across the globe.
Globalization doesn’t affect cryptocurrencies negatively one way or another. In fact, globalization actually creates a bigger demand for cryptocurrencies, which should increase the value exponentially.
At the end of the day, the threat of globalization is only potentially negative toward the US stock market. It’s likely very positive for cryptocurrencies, which makes cryptos the big winner in this category as well.
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Which Investment Strategy Experiences the Biggest Impact from Taxes?
Unfortunately for residents of the US, President Biden plans to raise capital gains taxes to about 43%. This is highway robbery if you ask me, but that’s a different story for another day.
Now: the US stock market and cryptocurrencies both suffer the same fate when it comes to capital gains taxes. Cryptocurrencies and stocks are both considered financial assets and they’re both subject to capital gains taxes.
So, unfortunately there’s no way around paying taxes.
Or is there?
If you’re smart, you’d take advantage of the tremendous tax loopholes made available through cryptocurrency IRA investing.
What are the loopholes?
Well, depending on how you set up your account, you can either open a tax-free or tax-deferred account.
In a tax-deferred account, you’ll invest pretax dollars into your cryptocurrency IRA. And you’ll use this income to buy cryptocurrencies like Bitcoin and Ethereum.
You’ll hold them until you reach 59 ½ years of age, which is when you’re eligible to begin withdrawing them. But you can hold off of taking distributions until you reach 70 ½ years of age, which is a nice benefit.
Only then are you required to begin paying capital gains taxes. And hopefully we’ll have a more business friendly president in office with a better tax structure by that point.
And the tax-free account means you’ve paid your taxes in advance on this income. So, everything you earn is yours to keep.
Pretty great, right?
Full disclosure: stock market retirement investors have access to the same benefits when they open a traditional or Roth IRA.
So, in the end, neither strategy is a winner. It’s a tie at best.
Which Investment Strategy Experiences the Biggest Impact from Interest Rates?
At the end of the day, when US interest rates are near zero, investors flood the stock market with money. Why? It’s the only way to make a decent return on their capital.
Right now, and for more than a decade, US interest rates have held near zero for the longest time.
By keeping these rates low, the stock market has experienced a massive boom like we hardly ever see.
Guess what?
The US is not going to keep interest rates low forever. They’ve taken on massive debt due to the coronavirus pandemic, so they’ll need to raise interest rates to increase inflation.
The increased inflation will cause future earnings for many US companies to suffer tremendously.
And in turn, the value of their stocks is going to drop precipitously.
What about cryptocurrencies?
The best part about cryptocurrencies is they aren’t affected by inflation, low interest rates, high interest rates, or any other interest rate in between.
By staying outside the normal financial system, the creators of these digital coins protected their cryptocurrencies from these devastating scenarios.
Bottom Line
At this point, I hope you can see that investing in cryptocurrencies is the superior way to earn and maintain your wealth. The stock market is on shaky ground right now even though everything looks rosy at the moment.
As soon as the US government decides to raise interest rates, the bottom will fall out of the stock market. And many companies will see a mass exodus of shareholders as stock values begin to crumble.
And let’s not forget about capital gains taxes. The increased capital gains taxes will scare many investors out of the market as well.
Overall, I highly recommend opening a cryptocurrency IRA as soon as possible. It’s the best way to accrue wealth in a tough financial environment. Read my review of the top 3 cryptocurrency companies providing fantastic service to their clients today.
