What is the best financial investment
Oliver has a cryptocurrency wallet worth between $ 40,000 and $ 50,000, but his quest to become a first-time home buyer turns out to be unsuccessful, with the Sydneysider claiming he was “blown out of the woods”. water “whenever he tried to bid on a spot.
That leaves the 26-year-old, who didn’t want his last name shared, in a curious situation. With house prices soaring and a healthy portfolio, should he focus on investing and abandon his real estate dream?
“It’s been a long hunt. I visited almost 70 homes and competed in 10 and lost every one of them. The average I lost with is $ 200,000 to $ 300,000 above asking price, it’s a bit flat, ”he told news.com.au.
“At 26 we all work hard, everyone works hard with the Australian dream in mind of having your own property. It’s something I’ve been working on since I was 18 or 20 and it seems like every weekend I go to houses and it feels a bit further away.
“I lost a property that I thought was incredible, that had a price guide of $ 1.2 million and sold for $ 1.6 million – the real estate agent would laugh.”
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The employee at the software company is looking for a two-bedroom, two-bathroom apartment with his girlfriend, from Neutral Bay to Chatswood, with a down payment of around 20-30%.
His interest in cryptocurrency was manifested when he was studying economics and hearing stories of people in America buying pizza for 50 bitcoins.
Liking the idea that crypto is a “traditional market disruptor,” he decided to take the plunge.
“It’s basically a new stock market and there’s this rapidly enriching mentality at 20 where you might think that one day I can become a billionaire,” he said.
In 2015, he decided to invest nearly $ 10,000 in the first year but was quick to point out that his strategy was to use money that was not essential for life.
“The advantage of cryptocurrency, unlike the Australian stock exchange, is that there is no minimum to invest. You can start with $ 1 and I remember I started with $ 15, ”he said.
Riding the ups and downs in crypto prices – he remembers being on vacation and bitcoin peaked at $ 24,000 before crashing the next day – didn’t panic him as he’s here for the long haul. .
But the millennial is concerned that a number of people think crypto is their ticket to driving a Lamborghini at the age of 30.
“I think right now if you look at who’s buying cryptocurrency in Australia it’s the younger population, everyone from 18 years old is jumping in with $ 50 to $ 100 and the 25 to 30-year-olds are looking at how to increase their savings so that they can play in a higher housing bracket or buy a property, ”he said.
“But the point is, it’s not regulated, that means it fluctuates and you can make a lot of money, so there’s a big appetite and young Australians love it, but there’s also a nature playful. There is certainly a huge danger in that it is essentially educated gambling … but if you look through social media it seems like everyone is getting richer and buying Lamborghinis from crypto. cash. This is the danger that my generation and the generation below me face as the market continues to grow.
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Cryptocurrency will always be part of his investment portfolio, but he doesn’t want to put all his eggs in such a risky basket, with the dream of owning it.
“A home is a great base … and it’s an asset that will never really lose money, not with our population rates and the growth of our properties and it’s one of the few assets that won’t pay off. no capital gains tax as a primary residence, “he said.
Cryptocurrency and residential real estate are the chalk and cheese of investing, according to Steve Mickenbecker, group director and financial expert at financial comparison site Canstar.
“Yet crypto is the darling of the current market and ownership the perennial favorite,” he said.
“Residential real estate has a long established history of steady capital appreciation, albeit punctuated by booms and corrections, and sits at the lower end of the risk scale.
“Crypto has a short lifespan, in its current forms has limited intrinsic value and no continuous cash flow. It is a speculative investment that fluctuates wildly. Yet fortunes have been made from crypto and some will be. lost. “
For investors who don’t get enough adrenaline from the vanilla crpto, they can steer investment with derivatives – options, CFDs and futures – to increase the thrill and danger of living on the limit, a- he declared.
“Diversification is a sound general investment principle, and real estate and crypto can be part of a diversified investment portfolio, provided investors understand the risk they are taking and place limits on investments at high risk in particular, ”he said.
For Fred Schebesta, co-founder of Finder, he sees cryptocurrency as a more accessible and easier to make investment compared to the broader ownership commitment.
“For crypto, the biggest fear is a sharp drop in value, but the best thing to do is view it as a long-term investment and ignore the day-to-day volatility,” he said. .
“For real estate, the concern is that you are buying too much and leveraging too much and potentially losing your property if interest rates rise.
“Our August research shows that nearly 150,000 Australian households would be in financial trouble if their mortgage rates rose out of the cycle – and that’s with rates at all-time low.”
Christopher Zinn, of the online financial advice platform Life Sherpa, said at this point that crypto can be an unregulated bet, but it’s cheaper than buying houses and arguably more fun.
“Some young Australians have done very well on the crypto roller coaster ride, but others have lost their shirts,” he said.
“Buying a home is hard and often heartbreaking work. It is also very expensive, but has the advantage of being able to live there too.
Diversification should guide your investment decisions, he advised.
“The winning investment portfolios hold a mix of stocks, bonds and real estate spread across geographies, currencies and sectors,” he said.
“It’s not just the number of investments, however. It’s more about the nature of assets – they also have to behave differently.