Alternative Investments Opportunities: Cryptocurrency
Traditional vs Alternative Investments
“Diversify your portfolio!”, they say. “Don’t put all your eggs in one basket!”. Good advice except if you’re in Sainsbury’s.
Whenever “investment” is mentioned, people generally mean traditional investments, such as stocks and shares, cash, and bonds. So you can buy shares in a public company, invest your cash in a savings account, or buy bonds.
Buying a bond is like lending money to an organisation for a (usually fixed) period of time and getting “yield”. Governments do this all the time to raise money, and the riskier the Government, the more interest you tend to get (because of the likelihood that the Government will default on its debt to you).
“Yield” is the annual net profit that an investor earns on an investment.
But yield in traditional markets can be disappointing, and sometimes you want part of your assets in an investment that moves in value differently from the main financial markets.
Prioritising your Portfolio
Most investment strategies involve splitting the amount invested in different ways depending on how much risk they’re willing to take. For instance, an ultra-conservative investor would invest 100% in cash. The return would be tiny, but the risk would be minimal. A more aggressive investor might allocate some of their investment to stocks and shares. A highly aggressive investor might invest more of their portfolio in dangerous but lucrative “options”, as well as stocks and shares.
In general, a balanced portfolio might contain 10% “riskier” investments for a higher return (with higher risk). “Options” and other clever financial tricks can be hugely lucrative, but they’re financial toys for the rich. They have high fees, high minimum investments and a lot of stress.
How else might you get a higher return on that part of your portfolio?
That’s where alternative investments come in. They’re “non-correlated” with the main markets – that is, they might sometimes move in the opposite direction (like Gold), or they might not move at all (like Fine Art). This makes them a “hedge” against the market.
There are lots of different alternative investment options, but this article is going to look at Cryptocurrency. Crypto now has investment products similar to traditional finance, but with higher returns that can outclass far more risky investments in the traditional marketplace.
Why Cryptocurrencies are a Good Alternative Investment
The usual barriers to entry for alternative investments are:
- Liquidity – some alternative investments such as real estate or gold are more difficult to buy or sell. If you have a pile of physical gold in your house, it’s a real hassle to sell it again. If you invest in a property, the process of finding a buyer can be tortuous.
- Barriers to entry – some alternative investments have a very high barrier to entry, usually in the form of minimum investments. Of course, if you’re buying a house or a piece of fine art, that might be hundreds of thousands of pounds. Often the barrier isn’t so big, but it’s sizeable.
- High costs – alternative investments usually need managing in some way. For instance, properties need maintenance, art needs looking after, and even the process of valuing both is expensive.
Cryptocurrency (done right) has none of these problems: it’s easy to enter and leave the market, The major Cryptocurrencies are highly liquid and you can easily buy and sell them. Any Cryptocurrency in the top 20 would have a big enough market of traders to make this easy.
There is no barrier to entry: all you need is an app/website and a debit card (and photo ID, proof of address, etc).
And if you use the right exchange, or provider, such as AQRU (for investment), then fees are minimal, both for buying, transferring elsewhere (for instance, to wallets), or selling.
If you take any investment, traditional or alternative, there’s going to be someone offering a “mutual fund” in it. That is, a company does all the buying, selling, and managing, and sells you “units” of the underlying asset pool.
This improves liquidity a little, though your money might still be locked in for a substantial period of time.
A middleman is going to be charging you fees and making decisions on your behalf. There’s also the usual minimum investment.
You can, for example, buy into a Bitcoin fund (called an ETF). Oddly, these funds don’t buy any actual bitcoin: they’re essentially betting on it because Bitcoin itself is sold on unregulated exchanges. There are quite a few ETFs now: see here.
What to Consider when Investing in Cryptocurrency
Cryptocurrency is volatile from day to day and like any alternative investment, you shouldn’t invest money you can’t afford to lose. Apart from the biggest Cryptos generally being the safest (with Bitcoin and Ethereum the top 2 mega-Cryptos), you also need to look at the companies you deal with. Are there good reviews? What’s the management team like? What safeguards are there to protect your funds?
How to Invest in Cryptocurrency – with AQRU
If you’re a moderately aggressive investor, you can invest like a moderately conservative one by investing in Bitcoin and/or Ethereum at AQRU for a 0% unconditional yield. AQRU uses prominent security company Fireblocks to keep your Crypto safe, and AQRU’s high return increases its value and allows you to benefit from any increases in value. You can buy Crypto from an exchange and send it in or buy it with your debit card through trusted third-party payment provider MoonPay. There are no other deposit fees.
No financial lock-in means you can get withdraw your Crypto immediately if you want to sell it during a particularly good day (though there is a $20 withdrawal fee for withdrawal to Crypto addresses). Though, Cryptocurrency should really be viewed as a long-term investment because the value tends up in 5-year timeframes but is highly volatile in-between.
You even get a 10USDC investment to get started, interest is displayed in real-time but added daily (for compound-interest goodness), and there’s even a $75 referral bonus. Sign up for free today and start investing!