Investment is the best way to gain wealth and passive income altogether. Investing ensures good money management for both present and future financial security.There are various investment options available in the market like bonds, stocks, bitcoin etc. Let’s discuss two most popular investment options one can go for-
Mutual funds: A type of investment where investors use their money to invest in other assets like stocks, debt etc. For this, you need to hire a good manager who can handle all the funds for you. The returns are completely based on the market fluctuations.
Bitcoins: Bitcoins are basically digital currency which includes exchange functions where a person can buy or sell their bitcoins with traditional currency. Depending on the market fluctuations, you can sell bitcoins to gain a good profit.
Mutual funds are best known for their stability and investment strategy. Investors just need to buy the right stocks as per the goodwill of the company. Before making any investment, calculate your returns with the help of a mutual fund calculator. It’s a good tool to calculate the maturity value of your investment. This will give you an idea of your returns before you invest.
Mutual funds are known as the investment vehicle among most of the investors. But how do mutual funds are different from bitcoins? Let’s find out.
Below given table shows the difference between investment in bitcoin and investment in mutual funds. Check out which one is better to invest in
Difference between Bitcoin and Mutual Funds
|Capital Required||Bitcoins do not require big amount for investment but returns are comparatively higher than mutual funds||Mutual Funds do not require a big amount for investment.|
|Risk Factor||Risk factor is high as there is no regulating body.||Risks are subject to market status. It includes lower risk when compared to bitcoins.|
|ROI||Average return on investment is 20%||Average return on investment is 13%|
|Regulating Body||There is no regulating body but a framework exists in most of the countries.||Securities and Exchange Board of India (SEBI) regulates the mutual funds. These are more regulated and structured|
|Withdrawal Mechanism||It takes a lot of time.||Amount can be withdrawn at any time.|
Advantages of Mutual Funds
Mutual funds are the most popular option among investors. This is the reason most of them choose to invest in mutual funds.
Portfolio Management- To get started with mutual funds, you need to pay a small amount which is used to hire a professional manager who will handle all the buying and selling of stocks etc.
Reduced Risk-With the use of diversification, one can achieve reduced portfolio risk. Most of the mutual funds will invest in 200 different securities.
Fair pricing– Mutual funds are easy to understand and get started.These includes minimum investment and are traded once in a day at closing NAV.
Advantages of Bitcoins
- Below given are some reasons which makes bitcoins more convenient and profitable than other traditional stock exchanges.
- Limitless market hours provides traders a fair trading market.
- Investors will get the option of fractional purchasing as there is no minimum price if you buy any asset.
- The instant buy or sell option allows investors to settle trades based on their custody of bitcoin aset and blockchain speed.
- Bitcoins involve very low fees for any type of crypto exchanges.
- Bitcoins provide a user friendly interface which makes trading more easy.
- There is no involvement of third party players.
Which is the Better One?
It would be unfair if we call one of them better than the other. Both the investments have their own pros and cons. We will try to add up some more facts to help you in deciding the better option of investment for yourself.
Bitcoin has a decentralized system which means that there will be no involvement from the government side as they don’t regulate it. This allows digital wallets to exchange freely and make decisions accordingly. Since, mutual funds are regulated by the government, it provides more security than bitcoins does.
Since there is no regulating body for bitcoins, it also involves a lot of risk. If you have made any investments in a fraudulent bitcoin exchange, all your money is gone as there is no one to approach for. You trade individually on the face value of the exchange. Most common exchanges are Unocoin, coinsecure and zebpay.
When you purchase a company’s stocks, the growth of your investment depends on the company’s growth, turnover, earnings and other factors. Whereas in Bitcoins, the price solely depends on the demand and supply.
Bitcoins are more volatile than mutual funds which means if you know the trading trick, you can get excellent returns on your investment. For good trading skills, you just need to research and invest properly. Mutual funds are safer but returns are lower compared to bitcoins.
So, If you are a good player and ready to take the risks involved in trading, you can get excellent returns on your investment. Whereas if you prefer to be on the safer side and satisfied with lower returns, mutual funds are the best option you can go for.