Bank savings and crypto are practically complete opposites when it comes down to the risk/reward ratio, as banks offer FDIC insurance for your savings account while crypto-assets have no real guarantee of returns or a tangible value most of the time.
Crypto even pales in comparison to the stock market, which is famously volatile but still bases most of its values on actual company earning reports from that year whereas cryptocurrencies rely solely on hope and speculation to grow in value.
This by no means indicates that crypto assets are a bad investment option for you, far from it actually, and it simply presents you with the information needed to make sure the next big step of your investment career is one in the right direction.
Your risk tolerance is the first thing that needs to be taken into account because the ability to handle an investment that could drop from 50-to 70% shows that you’re ready for the extremely volatile crypto market.
If on the other hand though, you have trouble sleeping at night when any asset of yours drops by a measly 5%, perhaps a savings account is the right option for you, as it offers you a flat rate, secure bank investment that won’t change in value, with the downside being that your earnings will be minimal as well, especially if you opt for the national average yield rate.
Cryptos are a way to make a lot of money fast if you make the right decision, demonstrated by Shiba Inu coin’s 49,000,000% increase throughout 2021, but should you choose to invest in a coin that ends up flopping, be prepared for massive losses.
Investment options should be tailored to your situation
The 2 options present 2 sides of the investment spectrum and it really comes down to what exactly you’re looking for when investing your money, as those with the plan to preserve their principal, most commonly older folk, will always be better off choosing a savings account instead of crypto.
„Quit while you’re ahead” is one good way to put it, as you’ll be setting aside your savings for a more stable future and retirement instead of gambling it all on a digital coin with no intrinsic value.
This doesn’t however mean that crypto is never fruitful, but rather that you have to be ready to suck it up when push comes to shove and your extremely risky asset drops in value overnight.
Earning millions from a couple of investments would be more than optimal, but these stories are scarce in the crypto market, even more so now that it’s become oversaturated with fresh currencies.
Finally, even if you choose to invest in crypto, pooling all your cash into one type of asset is never a good option, because it could spell massive losses if the already wobbly crypto market crumbles.
Instead, work towards a more diversified portfolio, balancing out your stocks, bonds, crypto, and even real estate investments in a way that you’re never really losing money.