Are you speculating or investing? Let’s examine the difference:
Investing: If you’ve done your homework and due diligence and you feel confident that your principal is safe, and you have a chance to make a profit, you are investing.
Speculating: If you are placing capital into something that has uncertain stability and offers little or no control, and you have a chance to make a profit, you are speculating.
“An investment operation is one which, upon thorough analysis promises safety of principal and an adequate return. Operations not meeting these requirements are speculative.” –Benjamin Graham
Are we saying not to buy Bitcoin because it’s speculative?
Not necessarily. As long as you’re clear on what your strategy is, why you’re investing, and you understand the risks. It’s completely up to you on what you want to invest in.
It comes down to risk versus reward and understanding volatility.
Have you seen the swings in Bitcoin lately?
The values of Bitcoin have had MAJOR fluctuations lately, at times dipping down 40%+ in a matter of a few days and then bouncing back up to new highs. It’s like riding the 2008 financial crisis in hyperspeed! If you want to invest in an asset class that is this volatile, you’re welcome to it, but it may not be wise to invest your entire nest egg or make this your only investing strategy… Just imagine a real estate portfolio dropping 40% + in 72 hours!
Why We Invest in Real Estate?
When we invest in larger commercial/residential real estate primarily because we can often influence or even control many of the factors that will lead to the success of the real estate portfolio. A few examples include:
- Forced appreciation (making strategic changes to the asset to drive increased income and value, examples include, adding new paint, carpet, appliances and landscaping to units).
- Negotiations: (Real estate offers a unique opportunity where you can negotiate price, terms, financing, structure, management; giving you more control over your investment).
- Multiple Exit Strategies (Real estate can offer multiple exit strategies. You can choose what move to make based on the market conditions. You can buy and hold, then refinance down the road. You can buy and hold, then sell. You can buy, fix up then sell, you can wholesale a real estate deals, you can change the use of the property such as converting apartments to condos and selling them off, or convert apartments into short-term rentals).
Could you do this with Bitcoin or other traditional investments? Not a chance. But to be fair, could your real estate portfolio go up 1,400% in just a few years’ time? I think not.
The Bottom Line: It really comes down to YOU and what YOU’RE looking to achieve. At Direct Source Wealth, we offer complimentary strategy sessions to find out what your goals are, what your needs are, and what your risk tolerance is. If we’re both a good match for each other, we’ll look for opportunities and strategies align with your needs and goals.
We help clients achieve generational wealth (wealth beyond your lifetime for generations to come) and TIME freedom (The freedom over your time AKA Financial Freedom, so you can do more of the things you want to do in life, without having to sacrifice your time for money). We are able to achieve both of these for ourselves and for clients by acquiring and vetting cash flow and equity real estate projects. We invest our own capital into these projects and we invite investors to invest alongside us for the ride.
To learn more about Diversifying your portfolio, check out our webinar on Diversification.