As an investor, you need to put money somewhere for you to make more money. With that in mind, you are constantly looking for an opportunity where you can find the right reason to put your money. It is not always as good as you think right?
Well, the thing doesn’t always go like we hope they will. Sometimes you put your money in the hope for a better return only to find yourself losing the money or not making any profit at all. As an investor what do you end up doing? Do you give up and stop investing or do you learn a lesson and move on?
A wise investor always learns a lesson and moves on. There is no room for giving up if you want to be a successful investor. You always gather what needs to be learnt in such an experience and go on looking for other ways to invest.
There are so many ways you can invest as an investor. You can start a business from scratch and grow it into a successful business and in the process make a profit or your ca go looking for a business that is selling some of their shares and buy to be part of them.
There is the emergence of the cryptocurrency and everyone is wondering whether it is wise to invest in them or not. The currency is being termed as the future coin. There is so much information on the trend of the coins and how lucrative it is to own some coin.
A good example is the bitcoin. the currency has come with a bang. Its value has shot so high that people are starting to think on whether it is the right time to invest in them or not. That is the reason why investors are comparing between investing in stock or bitcoin.
In both bitcoin and stock, you will use the money to acquire and if handled the right way, it can give you the return that you need. If you are an investor and want to know more about the two, you need to read along as I compare the two ways of investing.
Investing in stock
This has been a traditional way of owning a company. From many years ago, people have been putting money in big companies and in return gain profit as a return for their investment. Do you know the meaning of stock? Well, here it is.
What is stock?
The stock is an ownership investment in a company that offered its shares to be bought. When you buy stock in the company, you get ownership depending on the number of shares you have bought. Buying stock from a company requires you to investigate its performance before you do so.
Companies sell shares of stock with the aim of raising money to finance expansion or pay the debt. The good thing about investing in stock is that you become part of the company and take part in making decisions in the firm.
Why do we buy stock?
When you buy stock, you have three ideas in mind. These ideas drive you into investing in the company depending on how the company is performing. When you set money apart to buy stock, you buy because you want to;
- Have privileges
You don’t have to own a company to have a say in what the company is doing. You get to vote when it comes to choosing board members and when it comes to making critical decisions concerning the company. Your say will depend with the number of shares you own.
- Earn dividend
Yes, if you are not in a hurry of disposing of your shares, you can keep them to earn dividend each year. It is part of the profit made by the company. In many companies, the dividend is divided among the shareholders once every year and you the amount equivalent to your shares.
- Price can go up
While you are holding on the shares, the price can rise. That would be a perfect opportunity for you to resell the shares for a profit. Many investors in stock make money this way. there are some company shares that rise to a good amount that investors make a good profit when they sell.
The risky part of it
- The dividend is not a must
In some companies, the dividend is not a must. Due to the changes that have happened in that year, the company may face a rough patch and decide not to give a dividend to its members. That can be discouraging especially for an investor who needs the return on the investment.
- The stock price may fall
When it comes to investment, anything can happen. That means while you invest in the hope that prices might go up, they might end up going down. Now that is not good for any investor because it means the investor is losing money with the investment.
- May lose everything
The worst can happen. The company may hit a rough patch and may not be able to recover from the fall. The closure of a company means an investor loses all the money he/she has invested in the business and it is not good for any business person.
Investing in Bitcoin
Just like stock, investors are embracing the idea of investing in bitcoin. that is because of the good performance the coin has been having in the stock exchange. However, many are doubting about the idea and need more information before they put their money to buy the coin.
Investing in bitcoin is risky. You need to keep that mind while investing in the currency. After taking that into consideration, this is what you need to remember before investing;
- Buy what you can afford to lose
When it comes to bitcoin, the market as unpredictable. If you are willing to take the risk, you should always go for what you are willing to lose. That is because when it comes to the coin, you can wake up to a good trading day or a bad one. Take the risk in a positive way.
- Keep it in your wallet
When you decide to invest in the coin, you should always do it from a reputable coin exchange site like coin base. This is to minimize the risk. Once you have done the purchase, you need then to further move them into your wallet to further reduce the risk.
- Get from the reputable exchange site
There is a lot of sites that offer the services of buying bitcoin. what people don’t know is that most of them may end up lying to them and stealing their money with no bitcoin in return. Make sure you get reviews of an exchange site before you start the process of buying.
- Buy in bits
After settling on the best site for you. you need to buy a smaller portion of bitcoin at a time. This is to give you time to observe the way the dollar is trading. It gives you a chance to buy the currency at different dollar value which distributes the risk.
Differences between investing in stock and bitcoin
There is a difference when it comes to this two. When you buy stock of a company, you get part of the ownership of the company. You get to be involved in matters concerning the company and you also get to vote in board members.
Buying bitcoin is like buying any other currency with a value bigger than the value of the currency that you have. That does not mean you have a say in what the current ownership will or will not do. In Bitcoin, you get to own the coin that you buy.
- Ways of earning a return
When it comes to stock, there are two ways in which you can make money. You can hold the shares in the aim that each year, you will receive a dividend from the company each year. That way you get to share the company profit. When the time is right, you can sell the shares for a profit.
While they say the return on investment in bitcoin is high, you can only do it but selling back the shares to make the profit. This once sale can be good for the investor because he/she can make good money but if the market falls, there is no other way of making money with the currency.
- External influence
It can influence how the investor is going to gain returns on his or her investment. In Bitcoin, the process is completely organized. No internal influence since all the processes are independent and there is no way any external influence can affect the way it is trading.
When it comes to stock, there is a lot of external influence that can influence your return every year. Also, board and executive decisions have a way of affecting your profit. They might decide no dividend this year or make the company bankrupt and you lose all your money.
For you to make good money as a trader, you must invest in a highly volatile business. when you compare the two, bitcoin is more volatile than stock. You can wake up to a morning of up to 50% voracity or a 5-10% voracity. That will make trading of the coin ore profitable.
When it comes to stock, you may have many ways of making money but the one that might be profitable for you is when you sell the stock. The bad thing about the price of your stock in the stock market can only rise as much as 1% in a single day. That means you cannot make much from them.
Similarities found in bitcoin and stock investing
- Both are products
Yes, they are products that attract investors into investing in them. They both depend on demand and supply for them to trade in the exchange market. When the demand is high, the price tends to be high and when the demand is low, the price is low for both.
- Both are risky to invest in
When you decide to invest in both, you expect to make good money, or you expect to make a loss. When it comes to bitcoin, you make a loss if you lose your bitcoin in a fraudulence way or when the prices go down suddenly.
When it comes to stock, you may lose your money when the prices drop, when the company goes out of stock or when the company board decided not to give a dividend to shareholders.
- Easy to access them
When you are an investor and you want to invest in either bitcoin or stock. You will get all the information you need in a very easy and convenient way. all you need is a computer and internet for you to get a good exchange site and there you will find the stocker bitcoin that you need.
Which is the best to invest in?
For you to invest or not to invest in any of them is your choice to make. I know the decision is not an easy one to make since each has its own good side and bad side. You need to weigh in on what you are willing to lose or invest in depending on the information that you have.
Both are a good way of investing your money. When it comes to bitcoin, being an infant means it has a lot to offer to investors hence it might be a good time to invest. When you talk about stock, there are so alternative ways in which you can make money other than selling the shares.
Investing in a good product is always every investor’s dream. Being able to invest in something that will give you a good return is a puzzle that every investor must solve. Bitcoin or stock, the choice is yours. They both can give you good return as much it is risky. The choice is yours.