In 2010, bitcoin was valued for the first time in a real transaction, where someone swapped 10,000 of their bitcoins for two pizzas. If the buyer had held on to those Bitcoins, they would be worth more than $200 million. The above gives a brief history of how cryptocurrency trade began with Bitcoin. 14 years later, even though the cryptocurrency world has gone in and out of major dips, bitcoin is currently worth $20,510.
When Money Africa, a Nigerian edtech financial literacy and investment platform released reports of some companies earlier in the year; in their words, “Those that bought MTN at 169 are already sitting on 47% capital appreciation, those that bought Guinness Nigeria in 2020 have made about 500% on their investment”. That excerpt from the report describes stocks and their appreciation.
Before we move further in this article, it is important to note that both cryptocurrency trading and stock investment can make a man not only financially independent but very wealthy.
Crypto and Stocks
A cryptocurrency is a digital or virtual currency that is secured by cryptography, which makes it nearly impossible to counterfeit or double-spend. Many cryptocurrencies are decentralized networks based on blockchain technology. Binance, FTX2, and Coinbase Exchange are the three top crypto exchanges ranked by volume according to Coin Market Cap.
A stock also known as equity is a security that represents the ownership of a fraction of the issuing corporation. Units of stocks are called shares, and the New York Stock Exchange (NYSE) is one of the world’s largest marketplaces for securities and other exchange -traded investments. Crypto and stock trading have some similarities as well as differences. In determining which of the two concepts to invest in, investors must learn to balance comfort and risk, as crypto is riskier, while stock trading can be a lot more comfortable, especially with passive investments.
Here are some tips to guide your choice of trading in the financial market.
Crypto Guide, Pros and Cons
Before investing in cryptocurrency, you must understand that cryptocurrencies lack government backing, and how much the market will bear determines their value. Also, volatilities are the hallmark of cryptocurrencies. At some points, the crypto market can face sharp changes in value in short periods.
If you want to invest in cryptocurrencies, here are four tips:
- Have a strategy for trading – Don’t be deceived by the hype, step back and assess the market yourself
- Manage risks – Set limits on how much funds you invest in digital currencies as the market is a high-risk business
- Always diversify your crypto portfolio – Don’t put all your eggs in one basket. Spread your money across different digital currencies
- Trade for the long term – The dips can discourage you, but leaving your funds in the crypto market for long can offer you great rewards.
Stocks Guide, Pros and Cons
When you invest in stocks, you buy shares of ownership in a public company, the small shares you buy are called stocks. When the company grows and performs, your shares become more valuable.
If you want to invest in stocks, here are five tips:
- There are different ways to invest in stocks. You can invest in individual stocks, stock exchange-traded funds (ETF), and stocks mutual funds.
- The preferred method of investing in stocks – There are a variety of platforms you can use to buy stocks, you can decide to, open a brokerage account, hire a financial advisor, choose a Robo-advisor or use a direct stock purchase plan
- Accounts to invest in stocks – Different account types allow you to buy stocks – retirement accounts; 401(k)s, and (IRAs), taxable investment accounts, education savings accounts
- Set up a portfolio review schedule – I prefer passive investing so I don’t get to review my portfolio daily. You can choose to review yours daily, monthly, or quarterly.
- Regularly monitor business and financial markets news platforms to get recommendations on the best growth stocks you can buy at that period.
Final Thoughts
Crypto trading and stock investments are two methods of making your way to financial independence. However, both of these markets require some basic knowledge to avoid losing money. For cryptocurrency trading, I advise you to follow exchange platforms for the latest news on when to sell and buy. For stocks, if you want to grow your money with less effort, passive investment is the best method. I use this method and I get to check my portfolio whenever I choose to.