Downsides to HODLing bitcoin as an investment

[larry_vw_1955]

That sounds like a lot of middleman fees ain't it. Have you tried out real estate investments yourself?

kind of but not as an active investor just as a passive one where i handed over some money and trusted someone to manage the investment for me. that didn't work out though as far as me receiving a return.  

Larry, could you share how easy and practical is it for you to invest in real estate? Of course, include upfront capital costs, upkeep, bookkeeping expenses, taxes, etc.

for me, not practical. for someone else maybe it's practical but they are going to have to work their butt off most likely. take an active role in doing everything unless they can find a cheap property manager. and tax professional to handle all the tax return paperwork which i would have no interest in doing...

From what I'm hearing now is that it all seems to be a rather complicated process for very little gain. I would appreciate a little bit more clarity on this regard, not just hypothetical scenarios.

ok it is a complicate process. and if it's just one property then it probably wont make you much. if a tenant moves out and you have a mortgage to pay, you might be having to come out of pocket so you don't end up at the tax sale. i think the only people that make money in real estate is people who own alot of properties like 10 or more.

none of that is for me i now know. if i had 100k i would put it into an annuity paying 5% per year or something like that. guaranteed income. then take that $5000 per year which is $480 per month and use it for whatever i wanted to. maybe buy a little bitcoin here and there. i'm pretty risk averse as you can see based on my past experiences...

thanks for the questions and responses. i appreciate them all.

[ranochigo]

none of that is for me i now know. if i had 100k i would put it into an annuity paying 5% per year or something like that. guaranteed income. then take that $5000 per year which is $480 per month and use it for whatever i wanted to. maybe buy a little bitcoin here and there. i'm pretty risk averse as you can see based on my past experiences...

thanks for the questions and responses. i appreciate them all.

Gotcha. I agree with your point about calculated risk. I’ve got a big portion of my funds in more stable investments as well, ETFs, bonds etc.

I don’t think there is such thing as a riskless and high reward investment. I think of it as more of a balancing act; investing in Bitcoin can be risky but as far as returns go it can go fairly high. Traditional investment vehicles are not as risky but doesn’t exactly yield a very high return as opposed to assets like crypto.

[davis196]

#1) it doesn't pay any dividends like stocks
#2) risk of extended drawdowns which could cause loss of principal unlike in a real estate investment where the property only goes up in value
#3) unfavorable tax treatment since it cannot be depreciated like many types of assets can be when used for business purposes

the fact that it doesn't pay any type of periodic cash flow while it is owned is a serious issue. for these reasons i don't really like bitcoin as an investment.

1.Does holding precious metals like gold and silver pay any dividends?
Bitcoin is a currency, not a stock. If you want stocks, just buy stocks. Why do you have to compare two financial assets, that have nothing in common. Bitcoin is not a company.
2.The price drops could cause loss only if you sell at a lower price. Just HODL and wait for the price to recover. This isn't that hard.
3.Taxes can be avoided. I don't recommend this, but there are legal ways to pay less taxes. Just ask an accountant.

OP, if you don't like Bitcoin, then why are you posting in a Bitcoin forum? Just leave your Bitcointalk forum account and go post in other forums about finance and stocks trading.

[Plaguedeath]

none of that is for me i now know. if i had 100k i would put it into an annuity paying 5% per year or something like that. guaranteed income. then take that $5000 per year which is $480 per month and use it for whatever i wanted to. maybe buy a little bitcoin here and there. i'm pretty risk averse as you can see based on my past experiences...

This is a common misconception for most people.

Investing $100K in 5% APY will make your money become $105,000 in the next year, but you haven't calculate the inflation rate.

In my country the inflation rate from central banks is 5%, but the reality the real inflation rate is 10%-15%.

It means, if I invest to earn 5% APY, the amount is growing, but the value is dropping.

This year my money is $100K and the value is $100K, but the next year my money become $105K, but the purchasing value now worth $94.5K-$89.25K.

And I haven't calculate the capital gains tax, you need to pay capital gains tax from the $5K gains, so you're earn less than $5K per year.

You need to beat the "real inflation rate" and capital gains tax if you want to earn money from investment.

[larry_vw_1955]

OP, if you don't like Bitcoin, then why are you posting in a Bitcoin forum? Just leave your Bitcointalk forum account and go post in other forums about finance and stocks trading.

i mean i have an interest in bitcoin but i think the days of people becoming millionaires from investing in it NOW are long gone. i almost consider it just like owning fiat but maybe it appreciates slightly in price. nothing to get too excited about...

[Wind_FURY]

#1) it doesn't pay any dividends like stocks

#2) risk of extended drawdowns which could cause loss of principal unlike in a real estate investment where the property only goes up in value

#3) unfavorable tax treatment since it cannot be depreciated like many types of assets can be when used for business purposes

the fact that it doesn't pay any type of periodic cash flow while it is owned is a serious issue. for these reasons i don't really like bitcoin as an investment.

Those are all true and valid, but you have forgotten Bitcoin's ethos and why we're actually HODLing Bitcoin. It's not for mere financial gain, but it's also with the ethos that cryptography and using tools built based on cryptography shall bring forth real social change in the world.

Good luck to you and your journey if you don't like to HODL Bitcoin.

[vjudeu]

Not anymore. Bitcoin might have a price change of up to 10% in any given day but I think we would all agree that a price swing of 10% is probably not the norm. It's probably more like between 1% and 2% which is kind of inline with your average stock in the stock market...

And this is good, when the situation looks like that. Why? Because then, you can use BTC to pay for things, without worrying about jumping prices. More than that: if the price would be much more stable than today, then it would be possible to buy and sell products, while showing prices in BTC, instead of USD, or other fiat currencies.

Read the whitepaper. "Bitcoin: A Peer-to-Peer Electronic Cash System". Not "A Peer-to-Peer Speculation Vehicle". I know a lot of people would prefer the latter, than the former, but it is not the case.

[larry_vw_1955]

In my country the inflation rate from central banks is 5%, but the reality the real inflation rate is 10%-15%.

for me the solution to inflation in some cases is don't buy things that went up too much. changing purchasing habits. dont eat at mcdonalds if a hamburger now costs $50. that type of thing. some things you can cut out.

And I haven't calculate the capital gains tax, you need to pay capital gains tax from the $5K gains, so you're earn less than $5K per year.

You need to beat the "real inflation rate" and capital gains tax if you want to earn money from investment.

if i'm getting paid $400 per month from some annuity for life, then i'll set aside 10% or 15% of it to pay federal taxes if that is necessary and spend the rest. whatever that buys me i'll be needing to be happy with that. that's how i would look at it.

Those are all true and valid, but you have forgotten Bitcoin's ethos and why we're actually HODLing Bitcoin. It's not for mere financial gain, but it's also with the ethos that cryptography and using tools built based on cryptography shall bring forth real social change in the world.

well in that sense, i wish social change could occur because i think the government being able to just continually inflate the fiat money supply is a scam. but i don't think they are going to go along with switching over to bitcoin.

Good luck to you and your journey if you don't like to HODL Bitcoin.

thanks.

[Alphakilo]

#1 not all stocks do,

An example from one of your posts is penny. Right?