“In investing, what is comfortable is rarely profitable.”
– Robert Arnott
Investments have gone far beyond some grams of gold and pieces of land. It has come to various other instruments with more flexibility. Today we have surpassed the aspects of investing about what we know and where it is safe and have begun looking into investing in where we can grow. A few of these growing options are Mutual Funds and Bitcoin. You have been hearing it everywhere, and it has been a constant buzz. Well, here you can find out more about these investments and how you can profit from them.
Whether it is the best equity mutual fund or the best strategy to start bitcoin investments, the first thing you need to know is the basics. So here we go.
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What are Mutual Funds?
A mutual fund is a firm that collects money from multiple investors and invests it in securities such as stocks, bonds, and short-term loans. The mutual fund’s portfolio is made up of all of its holdings. Mutual funds are purchased by investors. Each share represents an investor’s stake in the fund and the income generated by it.
What is Bitcoin?
Bitcoin is a decentralized digital currency that may be bought, sold, and exchanged without the use of an intermediary such as a bank. Satoshi Nakamoto, the founder of Bitcoin, originally highlighted the need for an electronic payment system based on cryptographic proof rather than faith.
Bitcoin is not only the first cryptocurrency, but it is also the most well-known of the over 5,000 cryptocurrencies in circulation today. Each new dramatic high and stomach-churning collapse is eagerly covered by financial journalists, making Bitcoin an unavoidable part of the scene. So how could you not hear about it?
Difference Between Bitcoins and Mutual Funds
- In terms of investing:
– Bitcoin is easier to start off, and you can begin within minutes.
– With mutual funds, the starting procedure might be simple, but it entails documentation.
- Mode of Investment:
– Bitcoins can be purchased from a cryptocurrency brokerage firm or a cryptocurrency exchange.
– Mutual fund investments can be made through mutual fund houses or through online mutual fund platforms.
– Bitcoins are extremely volatile and are frequently referred to as high-risk investments.
– Mutual funds are less risky than bitcoins. Furthermore, understanding the fundamentals is also quite easy; you can easily start investing in any best equity mutual fund once you are reasonably confident.
– Gains may be taxed as capital gains, business or professional income, or income from other sources.
– Gains are typically long-term (LTCG) or short-term (STCG).
– Bitcoins are legal, but they are not recognized as a form of governance.
– Mutual funds are lawful and subject to regulation by the SEBI.
- Time to Trade:
– The Bitcoin market is open 24 hours a day, 365 days a year.
– Trading is time-bound and comes to an end when the market closes for the day.
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How to Invest in Mutual Funds?
Mutual funds can be purchased through your financial advisor or an online platform. It is critical to understand the sort of fund in which you wish to invest and to select the appropriate scheme type and asset management company.
Once these basic procedures are finished – all that remains is to complete a simple online registration and KYC procedure and make an online payment for the amount you desire to invest. If you invest through an advisor, you may be required to furnish a bank cheque for the amount of your investment. You can invest in a mutual fund in one big sum. However, the minimum investment amount varies depending on the fund company and the sort of scheme you choose.
How to Invest in Bitcoins?
The sign-up process for Bitcoin is comparable to that of any other e-commerce platform – a basic KYC verification, connecting of a bank account and Aadhaar number – and you’re ready to buy bitcoins in Indian rupees.
A quick Google search reveals that one bitcoin is worth almost 39 lakh rupees. However, this does not imply that you must immediately invest in one bitcoin. You can begin your crypto-journey with as little as Rs. 1000, which will purchase a fraction of a bitcoin. As previously stated, there are no statutory regulations governing bitcoins.
As a result, there is no maximum legal limit on the number of bitcoins that a person can purchase. You are free to purchase as many bitcoins as you like. It should be emphasized, however, that the absolute limit to bitcoins is the total amount of bitcoins that can be mined.
What to Choose?
Measuring and comparing bitcoins and mutual funds on the same scale would not make sense. Both give completely different investing opportunities. Both, however, follow the same rule: one must invest according to one’s risk tolerance after carefully weighing the facts, figures, and risk considerations.
Investing in mutual funds makes sense for risk-averse individuals. True, mutual funds have risks, but even with some short-term volatility, most businesses will most likely continue to exist in the future. Investors who invest in a broad-based index fund or ETFs comprised of stocks have a decent chance of achieving consistent long-term returns.
Investing in bitcoins makes sense for people who want a little extra diversity in their investment portfolios and are willing to incur risks associated with fluctuations and volatility. Many experts, however, suggest that even if you believe bitcoin investment is a suitable fit for your portfolio, it should not be the primary emphasis of your investment strategy. And that is true.
Bitcoins are more new to the investing market than mutual funds and are also a great opportunity of making profits. Mutual Funds, on the other hand, are somehow known to be profiting in the last couple of years. Both these investment hosts have their sets of pros and cons though, and it comes to your end to know which is better. As an investor, analyze your risk appetite and all considerations. Once you do that, you will know which of the two options is the best one for you.