Investing is stressful. 

Stress may not be the best way to describe it, for some, it’s downright overwhelming. Not only are there more investment options than ever before, but we’re talking about your money and a choice that directly impacts your life and in many cases the lives of others in the present and future. If that wasn’t enough, add the allure of digital currency which for certain folk resulted in overnight fortune and for many others, a rollercoaster ride that rattled them around, tossing money out of their pockets, and making them sick to their stomach – we all have that one crypto friend. 

In this blog, we’ll explore the pros and cons of three investments: real coins, bullion, and digital currency, as well as the ideal investor type for each. 

Real Coins

Real coins have been a popular form of investment for centuries. There are many psychological motivators as well as financial ones involving collecting valuable coins, including control over physical things, historical significance or numismatic value. Numismatics, for those who don’t know, is the study of coins and currency, and the value of a coin can depend on its rarity, age, condition, and historical significance. Here are some of the pros and cons of real coin collecting as an investment.

Pros:

Tangible asset: One of the main advantages of real coin collecting is that it is a tangible asset. Unlike digital currencies, which exist only in the digital realm, coins are physical objects that can be held and stored.

Historical significance: Many coins have historical significance, which can increase their value over time. Collecting coins with historical significance can be a fascinating and educational hobby.

Limited supply: As the supply dwindles, the value of the coins can increase.

Cons:

Costs: Coins can be expensive to acquire, and the cost can vary greatly depending on the rarity and condition of the coin.

Difficulty in authentication: The authenticity of rare coins can be difficult to verify, which can lead to fraud and counterfeit coins.

Storage and security: Coins require special storage and security measures to protect them from theft, damage, and degradation. Proper storage and security can add to the cost of the investment.

Bullion

Coins have great stories, but nothing in terms of investment is as storied as precious metals, with gold treasures dating back as far as 4,600 B.C. As of today, their popularity has skyrocketed as a hedge against inflation. Bullion as it is known, involves buying and selling precious metals such as gold, silver, platinum, and palladium. The value of these metals is based on their weight and purity, rather than their historical significance. Here are some of the pros and cons of bullion investing as an investment:

Pros:

Tangible asset: Bullion, like coin collecting, is a tangible asset. The precious metals can be held and stored, providing a sense of security and stability.

Inflation hedge: Here’s a word you hear almost every day, inflation. Precious metals are often seen as a hedge against inflation, as their value tends to rise when the value of paper currency declines.

Liquidity: Precious metals are highly liquid assets, which means they can be easily bought and sold on the open market.

Cons:

Volatility: Like any investment, the value of precious metals can be subject to market fluctuations.

Storage and Security: Precious metals require special storage and security measures to protect them from theft, damage, and degradation. Proper storage and security can add to the cost of the investment.

Limited Growth Potential: Unlike real coin collecting, the value of precious metals is based on their weight and purity, rather than their rarity or historical significance. This means that the growth potential of bullion investing may be more limited than other forms of investment.

Digital Coins

Last but definitely not least: digital currency. It’s scary, exciting, and for many, overly complicated. Digital currency, or cryptocurrency, is a type of digital asset that uses cryptography to secure transactions and to control the creation of new units – and if that doesn’t mean anything to you, you’re not alone. More so, it’s hard to invest in something that you don’t understand. The hype of crypto built and destroyed fortunes. Bitcoin and Ethereum being two of the more popular digital currencies, but there are many others available. Here are some of the pros and cons of digital currency as an investment:

Pros:

Decentralized: Digital currencies are decentralized, which means they are not controlled by any central authority, such as a government or bank. Caution here, at first this was a boon in the decision-making for investors, driving them to buy into what felt like a revolution. The magic of that word decentralized has worn off for many who bought into the buzz and lost unfathomable amounts of money. For some, the opposite is true. 

Growth Potential: Digital currencies have the potential for high growth, as their value can increase rapidly over short periods of time. For example, in 2017, the value of Bitcoin rose from around $1,000 to over $19,000 in just one year.

Easy Access: Digital currencies are easy to buy and sell, as they can be traded on online exchanges.

Cons:

Volatility: Digital currencies can be highly volatile, with value subject to rapid fluctuations.

Security: Digital currencies are vulnerable to hacking and other security risks, which can lead to the loss of funds.

Lack of Regulation: Digital currencies are largely unregulated, which can make them more susceptible to fraud and scams.

Choosing the Right Investment

So, which investment is the right choice for you? The answer to this question will depend on a number of factors, including your investment goals, risk tolerance, and investment timeline.

If you are looking for a tangible asset that has historical significance and a limited supply, real coin collecting may be the right choice for you.

If you are looking for a tangible asset that can provide a hedge against inflation, but with less emphasis on historical significance and rarity, bullion investing may be the right choice for you. 

If you are looking for an investment with high growth potential and easy access, digital currency may be the right choice for you. 

For each, be aware of the risks. It is important to approach these investments with caution and to do your research before making any investment decisions.

For more information, contact our Coin Crew.