For much of the last 10 years, Bitcoin BTC/USD has been driving the conversation when it comes to alternative investments. It’s not hard to understand why. Bitcoin is a perfect storm in terms of its ability to generate press and spur casual and seasoned investors to make huge bets on it. Many investors hailed Bitcoin as the currency of the future and cleared their portfolios to put everything in Bitcoin.
They looked like geniuses when Bitcoin hit an all-time high of almost $68,000 in November 2021. Unfortunately, anyone who didn’t get off the Bitcoin train in November learned the hard way that Bitcoin is as volatile as it is lucrative. Bitcoin has been in freefall for most of this year. All of this begs the question, would you have been better off putting $10,000 in real estate or Bitcoin a year ago?
Bitcoin from Jan. 2, 2021 to July 21, 2022
To assess whether $10,000 in Bitcoin or a $10,000 real estate investment was a better idea, let’s make an apples-to-apples comparison. According to Benzinga, one single Bitcoin was trading at $29,405 on Jan. 2, 2021. That means a $10,000 investment would have bought you 0.34 worth of Bitcoin, or slightly less than a third of a coin.
Bitcoin posted strong gains for almost all of 2021. In fact. it shattered its own all-time high.on a number of occasions during the year. The peak was a November 2021 valuation of $67,553.95. Needless to say, Bitcoin investors were dancing in the streets. Many of them used their profits to reinvest in Bitcoin.
In their defense, reinvesting in a high-performing offering is not the least bit controversial. Many investors adopt this strategy, both for traditional and alternative investments. But, as the old saying goes, “What goes up, must come down.” Not long after Bitcoin hit its peak, the first glimpses of inflation began dragging the economy down and then the Federal Reserve started hinting at interest rate increases.
That’s when the bottom began to fall out. Bitcoin has basically been in a state of freefall ever since, dropping below $20,000 before making a slight rally to get back to its current value of $23,789. That means the $10,000 (or 0.29405) worth of Bitcoin you bought last January is now worth 0.23154 of Bitcoin, which is about $8,100. In other words, you’d be down roughly 19% on your original investment.
A $10,000 Real Estate Investment from Last January 2021 to Now
Let’s imagine for a moment you were a less-adventurous alternative investor who wanted to put your money in something besides the stock market with $10,000 in January 2021. So, instead of Bitcoin, you decided to put your $10,000 into the Flagship Real Estate Fund.
The Flagship Real Estate Fund works just like a normal investment and since it’s not a cryptocurrency, you don’t convert your investment capital into any other monetary unit. The fund itself is a non-traded real estate investment trust (REIT) that has a stated goal of providing passive income for investors while also giving them the chance to benefit from value appreciation on the assets in the fund.
Flagship consists of a diversified mix of core-plus, fixed income and opportunistic holdings from the following real estate sectors:
- Single-family rentals
- Multi-family developments
- Commercial properties
According to the fund’s historical performance data, your $10,000 investment from January 2021 would be worth $13,480 at the end of June 2022. In other words, you’d be up almost 35% on your original investment. That’s not as high as Bitcoin at its peak but, $13,480 is 66% more than the $8,100 you’d have if you put your $10,000 into Bitcoin instead of the Flagship Fund a year and a half ago.
A Case of the Tortoise and the Hare
REITs like the Flagship Fund may not be as alluring as cryptocurrencies like Bitcoin, but a 30% gain beats a 19% loss any day of the week. This example is a classic case of the tortoise vs. the hare. Bitcoin sprinted into the lead while Flagship Fund booked slow and steady returns, but at the end of the race, it was the Flagship Fund that won out. Timing is everything.
If you’d dumped your Bitcoin at its November peak, you would have made over 600% on your original investment. If you waited for another record high, you paid a heavy price. So, if you’ve got some capital to put into an alternative investment, you should know real estate is still a proven winner that is capable of producing impressive returns.
Looking for ways to boost your returns? Check out Benzinga’s coverage on Alternative Real Estate Investments:
Or browse current investment options based on your criteria with Benzinga’s Offering Screener.
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