Investor BlogsInvestment Strategies: Real Estate vs. Bitcoin by Nadia Abulatif March 25, 2018February 15, 2019 by Nadia Abulatif March 25, 2018February 15, 2019With the technology nowadays, many advanced investment strategies have occurred. However, the importance of such strategies only shows up with the amount of turnout they receive from the public.One of the most recent investment strategies has been the bitcoin. This investment strategy has caused a huge hype in the media lately. There have been a lot of controversies around it in terms of how safe is it as an investment. Therefore, in this blog, we are going to talk about investing in bitcoins vs. investing in real estate. So, what are bitcoins? And what are the differences between this investment strategy and real estate? Finally, we are going to discuss whether it is better to invest in real estate vs. bitcoins.Related: The Best Property Investment Strategies for BeginnersFirst: What are bitcoins vs. real estate?As we all know already, investing in real estate means that you put your money into a tangible asset in the form of a property in order to generate a profit or an income. You buy a property and choose to invest in any way you wish.The real estate investing arena provides a wide variety of investment strategies that you could go with. Be it rental strategies or even flipping houses, you get to choose. The income you get from that property is usually generated on a daily, weekly, monthly or even annual basis.On the other hand, bitcoins are a completely different investment method. Bitcoins are basically a form of cryptocurrency with which you deal with online. The origins of this investment method come all the way from Japan as it was introduced in 2008. The original purpose of it was to be an electronic payment system which is based on algorithms.So far, it is pretty easy to understand the concept of both real estate and bitcoin investment strategies. However, the question is, how are they different or similar? In the next section, we’ll be discussing the answer to this question.Second: What are the similarities and differences between both investment strategies?The main similarity that both real estate and bitcoins share is being investment strategies. In other words, they are methods through which you can invest your money to generate an income/profit. However, what are the differences between them?#1. Tangibility:As we already said in the definition of real estate, it is an investment in a tangible asset. Therefore, this means that you are actually investing in a physical asset. In contrast, bitcoins are cryptocurrency that you deal with online. This means that, unlike the ordinary currency, you cannot touch it. Therefore, when you are investing in a bitcoin, you are dealing with an online wallet. This also means that the transactions are all made virtually.#2. Diversification:The one sure thing about real estate is diversification. It means that you get to distribute your money over multiple investments in order to mitigate the risks. Therefore, you can lower the risk level of real estate investing. However, when investing in bitcoin, there is no other choice than to purchase this currency. In other words, you risk either losing that money or accumulating a huge fortune out of it.Related: How to Reduce the Risk in Your Real Estate PortfolioThird: Which investment strategy to go with?In order to decide whether to invest in real estate or bitcoin, you should understand the challenges of both. Therefore, here is why you should or shouldn’t invest in either real estate or bitcoin:#1. Investing in bitcoin means rapid profit/loss:The thing with bitcoin price is that it comes up and down rapidly. This could be a great thing or a disaster. Rapid growth in its value means, obviously, rapid gain. Many people were able to make millions of dollars by investing in bitcoin. That is of course, in the very beginning when the price was too low. At one point, the price of a bitcoin jumped all the way to around $19,000. However, even though this is great news, it is not the case anymore. First of all, the prices are not the same anymore. Second, there is no guarantee. If the bitcoin price goes down after you have purchased it for its current price, then you might experience a huge loss.Investing in real estate, however, is completely different. When investing in a property, one thing is for sure: there are no rapid gains or losses. Moreover, real estate property price is very predictable. This means that you get to take necessary precautions if the real estate market appears to go down. Another thing that makes real estate investments better in a way is the availability of low-risk investments. If you are a beginner real estate investor, you get to start with investments that come with lower risks. This allows you to learn about the business gradually as well as generate wealth on a steady basis.#2. Investing in real estate gives you tax benefits:In real estate, tax benefits come in the form of deductions that apply to property expenses as well as losses, in some cases. Therefore, in the long-term, you will find that it adds up to a large sum of money. So, really, making money in real estate comes in different forms and investment strategies.Investing in bitcoin is different. You buy bitcoin online and treat it as real money that allows you to purchase whatever you want. No tax benefits or any other privileges apply. This means that the only way of making money is actually waiting for bitcoin price to rise in value and sell it afterward.Related: Your Guide to Short-Term Rental Property Tax Deductions#3. Investing in real estate provides you with regular cash flow:Perhaps the part that makes real estate amongst the best investment strategies is the cash flow. That is especially if you are investing in rental properties. It means that you know that there is an income that is generated on a steady basis. Investing in bitcoin could be a one time hit that you either hit it or not. So bitcoin is more like stocks or even the lottery. You buy bitcoin online and hope for the best.#4. Predictability:Investing in bitcoin is very unpredictable, unlike real estate. When you buy an investment property you get to estimate the return on investment by simply performing the real estate market analysis and investment property analysis. This gives a real estate investor an understanding of the investment potential as well as the best investment strategies. On the other hand, investing in bitcoin means that you take a risk of investing in something that is not guaranteed. You can never predict the rise or fall of the bitcoin price accurately.Finally,If you ask us, we recommend that you invest your money in real estate. Given the facts above, there is no way to take a crazy step towards investing in bitcoin unless you are an expert. Therefore, whatever you choose, make sure you know the risks that come with such investment strategies. Otherwise, you lose your money instead of reaching a level of financial independence.For more on the real estate business, check out Mashvisor’s blog. Start Your Investment Property Search! START FREE TRIAL Cash FlowTax Benefits 0FacebookTwitterGoogle +PinterestLinkedin Nadia AbulatifNadia Abulatif is an experienced Content Writer at Mashvisor. 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