What is the best alternative to save my money? Cryptocurrencies or Mutual Funds? Know the differences, advantages and disadvantages here
We have heard everything about cryptocurrencies.
That they are an excellent source of income, that they are a plan by a foreign government to spy on us and steal liquid from our knees , that they have no future or that they do, that it is a pyramid scheme or a thousand other things.
Whatever rumor you hear, there is an absolute truth: you can do good lucas with them.
With a strategy, knowledge, patience (and willingness to keep learning) you can transform a small investment into a much larger amount.
Even so, within the cryptos there are users who choose not to move their investments, they simply buy a "safe" currency and HODL, (keep them without movement for a long period of time) enduring their falls and rallies.
Either because they don't have time to be trading or because they don't feel confident to buy and sell.
Even though you can earn more than leaving your savings in the bank , the growth rate of that investment is much slower compared to a user who trades, and yes, we can also say that it is just as risky.
The truth is that cryptocurrencies opened the minds of people like you and me, who grew up listening to their parents and grandparents say “save so you can buy a car, a house and travel the world”.
But unlike those times, if you have an average income of 500,000 CLP and you save 100,000 CLP for 10 years, you may only be able to buy a car or start the initial of a house.
For this reason, many of us look for ways to accelerate savings, and if you are not one of those who have a startup, you may prefer to make your money work for you.
In this sense, let's see two of the most popular options:
- Savings in Mutual Funds.
- Cryptocurrency savings.
Now, there is no one better than another, of course at Orionx we encourage and promote the use of cryptocurrencies in all its senses, even so, the ideal is that you choose an alternative with which you feel confident.
Saving in the long term in cryptocurrencies (or making an infinite HODL) is a topic of debate, on the one hand they are too volatile to save on them, but on the other there are cryptocurrencies that still have a long way to go and whose trends, despite of the ups and downs, they are bullish (like bitcoin 🙊) allowing a glimpse of future profits.
Suppose you bought in 2019 when the btc was at approximately 7,000 USD and you "held" until now that it is hovering between 45,000USD and 50,000USD, you have a profit margin on 35,000USD depending on the amount you have bought.
In just two years, and without doing practically anything, just create an account in the exchange of your choice (we recommend Orionx.com because apart from having the largest variety of cryptos to invest, we have the lowest commissions for leejos in Chile).
Not bad, huh?
There is also the other side of the coin, suppose you bought in 2019, but in the drastic drop of May 2021 where it fell from 64,000USD to 28,770USD, you panicked and sold because you thought it would continue to fall.
You lost? No, but you would have missed out on a huge margin if you had waited for the rally.
And how to know that a rebound was coming?
Having basic knowledge of trading, reading the trends and the market.
You can make a lot of money with cryptocurrencies , but there will always be more chance of earning if you move your investments, if you buy there and sell here, if you study and are aware of trends.
You may buy, save and forget about them for two years, which is also viable, many do, but you must be very sure and studied the crypto in which you are going to invest, which you have faith that it will rise to the moon 🚀.
A mutual fund is an account that receives investments where various people pay, and that is managed by another entity recognized by all, which manages the investment to make it grow.
Translation : it is an account that belongs to Juan, who knows how to trade very well, so Javier, Alejandra and Sofía (who don't know how to or don't want to trade) invest X amount of money in that account so that Juan can grow said investment change of a commission for a certain time.
- They are regulated , that is to say that the CMF (Commission for the Financial Market) requests legal, financial and accounting information with certain regularity.
- They have various levels of risk, it may be more comfortable to invest in a more conservative fund, but with a lower profit margin or that you prefer to give everything to a risky fund but with maximum profitability.
- They allow the withdrawal of your invested quotas whenever you want, this has a good and a bad side, because although in case of an emergency or something else you can withdraw your money, the meaning of long-term investment is lost if you alter it. On the other hand , Investment Funds are more exclusive, and you can only withdraw your money once the fund is liquidated, forcing you to wait until the end.
In short, you invest money and others do the work for you.
Although there are several platforms to invest in mutual funds in Chile, there are also mutual funds for cryptocurrencies, with different levels of risk (although they will always be more volatile).
Cryptocurrencies also have options in Stable Coins, or coins backed by fiat money, which are a more “modest” or safe option and it is still in crypto, it is the best of both worlds.
In either of the two options there is the possibility of winning or losing.
In either of the two, you must invest money that you are willing to lose and that you do not need tomorrow, or in 3 more days.
The difference is that mutual funds in pesos (CLP) can be more “safe” because they invest in recognized stocks and have the backing of the government.
If you invest in crypto, you are not buying a stock, but a digital asset that is valuable as long as there is demand. Fortunately, there are plenty.
In addition, little by little, different countries are introducing them more, such as El Salvador , which now names bitcoin as legal tender, that means that you can buy whatever you want with bitcoin, yes, you read that right! What you want.
On the other hand, you can do Staking ( no, not “ stalking” , please Rodrigo, forget your ex ), staking is when you buy cryptocurrencies and block this investment in exchange for a reward, so that new chains of blocks are created and give “weight” to that currency.
In other words, you are sponsoring the cryptocurrency because you believe in it and its profitability so much that you decide to temporarily give up the availability of that money, so that it grows.
This is not the same as the HODL, because this the crypto-user can withdraw the money whenever he wants, instead the Staking blocks it for a certain period of time.
Therefore, if you decide to go for savings in cryptocurrencies, either by HODL or by crypto mutual funds, remember:
- Review the associated commissions of each platform.
- Study the behavior of the cryptocurrency over time.
- Ask yourself honestly “would I prefer to earn less over a longer period but with more security? Or do I prefer to take risks to earn more in less time?
Whatever your choice, we will continue to love you 💙