I’m a beginner. Should I buy bitcoin or individual stocks?
Which of these options is better for beginners? Which one will be better long term?
In a world as changing as today, we are in presence of many more options in which we can invest and put our money to work. Of course, traditional options are still the safest, and in most cases, the most profitable ones. But over time, the world has witnessed a huge globalization process, managing to innovate basically all kinds of industries, and the investment world has not been left behind.
Bitcoin is one of the most famous cryptocurrencies in the world, and we can affirm that it was one of the precursors of this investment model. It was created in 2008 and officially launched on the market in 2009. Little is known about its founder, who is presumed to be a person of Japanese nationality, whose identity has not been revealed, even in 10 years since its creation.
For all those who took a chance and bought bitcoins back then, without a doubt it must have been one of the best investments of their life. Today the price of Bitcoin has climbed to $ 18,620 (US dollars), a figure that puts it at the top of the cryptocurrencies again, after having a few difficult years between 2017 and 2019.
The problem is that many experts claim that Bitcoin is in a bubble, and as we all know, all bubbles in the financial world at some point burst, and obviously the people who have a stake in that investment are the most affected.
On the other hand, the stock market, precisely for individual stocks, is at one of its highest historical points, after having fallen dramatically (and even historical points) in the month of March due to the coronavirus. And while we all know there are plenty of bubbles in the stock market too, it’s highly unlikely that it will freefall twice in the same year.
All of this brings us to the question, what is best for a novice investor? The famous "Bitcoin" that everyone is talking about these days, or the traditional individual stocks?
Well, to answer this question, many factors must be taken into consideration, such as the capital that the investor has, his investment objectives in the short, medium and long term, and of course, his ability to manage risk.
Both are extremely powerful investments, but of course, both have their pros and cons. In my opinion, investments in the world of the cryptocurrency market base their principles on speculation, something that without a doubt the long-term investor will always try to avoid. There are very few metrics that are available when choosing a cryptocurrency to invest, and there are not many financial bases that support it.
However, it is a market that has been shown to fluctuate very quickly, and that its price can lead investors to take large capital gains in a short time.
On the side of individual stocks, the risk will always be present, but it will be much lower than what is taken when investing in cryptocurrencies. For what reason? Well, because investing in an stock is investing in a company, its products, services, policies, leaders, etc. Today we have many ways to analyze a company, and evaluate what we think is a fair price to buy a stock. In the case of cryptocurrencies, we don’t have any of those documents to help us support your purchase.
I insist, each investment choice is completely individual, and each person must pursue their objectives in the way they believe best. Personally, I think that Bitcoin is in a bubble that can burst in the coming years, and we can realize that when we see people who have nothing to do with the financial world exalted and investing large amounts of money in cryptocurrencies , simply because it has had a “winning streak “ in recent times.
For beginners, and investors pursuing long-term goals, I believe individual stocks will always be the best option, as Wareen Buffett says, “The stock market is a system designed to move money from the pocket of the impatient to the pocket of the patient"…