Automated Bitcoin Savings vs Investing in Shares — Which One Brings the Best Returns? In this articles, you see the comparison based on historical data.
The $1 Investor is a weekly Bitnob series that delves into practical tips and habits for anyone who desires to make intelligent bitcoin investments.
Before I started my journey with bitcoin, I was a consistent investor in stocks. But over time I saw a difference in return while investing in bitcoin.
In this article, I will be comparing the rates of return between consistently investing in bitcoin and consistently investing in stocks. For the sake of this article, we will be looking at an investment period of 5 years.
First, let’s lay some foundation before we look at the figures.
What does automated bitcoin savings look like?
When I talk about automated bitcoin savings, I’m referring to dollar cost averaging. Dollar-cost averaging is an investment strategy where you invest a fixed dollar amount on a regular basis, regardless of the price of what you’re investing.
On the Bitnob app, you can automatically save in bitcoin. What this means is that you don’t have to manually save bitcoin into your bitcoin savings plan. The Bitnob app does that for you. Bitnob used the same dollar-cost average strategy to save in bitcoin. You set the amount, frequency, and duration, while Bitnob does the rest. If you’d like to know how to set up a bitcoin savings plan, click here.
How about investing in shares?
When you invest in shares, what you’re doing is investing in the company that issued those shares. That makes you a shareholder of that company.
Just like bitcoin, the dollar cost average investment strategy works for investing in shares as well. The principles remain the same: investing a specific amount consistently over a defined period of time regardless of the price of those shares during that period.
What’s the earning potential of bitcoin and shares?
Although it’s always better to look at investment as something you do long-term and not something you look for as a way to make short-term gains, research shows that bitcoin and shares have different rates of returns.
According to NerdWallet, the average stock market return is about 10% per annum and has been that way for the past century. Bitcoin, on the other hand, as reported on Cointelegraph is known to give an average return of 230% per annum. Messari researcher, Roberto Talama, stated that bitcoin performed 10 times higher than the second-best-performing asset class. No wonder bitcoin is said to be the best-performing asset in the last decade.
So which one brings the best returns?
Now it’s time to put bitcoin and shares to the test.
Let’s find out how bitcoin and shares perform using the dollar cost average investment strategy for a 5-year period assuming that a person invests $10 every month without skipping a beat. We’re also going to assume that the person started off with a $0 investment balance.
For this, we’ll use Bitnob’s DCA calculator to calculate how much bitcoin you would have accumulated in 5 years. And for stocks we will be using NerdWallet’s Investment calculator, to find out how much you’d get for investing in stocks for 5 years.
To keep everything fair and clear from any doubt, I’ll be cross-checking my calculations with Swan Bitcoin’s calculator at the bottom of their website for bitcoin and the S&P 500 Periodic Reinvestment Calculator (With Dividends) for shares.
Are you ready for the results?
When we put in the values in Bitnob’s DCA calculator I got this:
Please note that due to the volatility in bitcoin to get an accurate figure, we had to backdate it by 5 years.
As you can see above, you’ll see that a total of $600 was invested, while the total value of the investment was $1,385.86 (0.0660 bitcoin). This gives you a return of 130.98% in profit.
Let’s cross-check this with Swan Bitcoin’s calculator.
As you can see above, the figures are slightly different but it’s still at a profit. For the $600 invested, you’d get $1,314, which is a 118.99% profit.
Now let’s look at shares.
When I put in the values in NerdWallet’s Investment Calculator I got this:
As you can see above, after investing $600 you will get a total value of $780.82. This gives you a return of 30.14% in profit.
Now let’s cross-check this with S&P 500 Periodic Reinvestment Calculator. This calculator includes dividends as well. Dividends, simply put, is your share of the profits of the company you invested in.
In order to get a clear picture of your investment returns with dividends, I backdated it for 5 years. This is what I got:
After investing $600, you have $790.46. That is 31.74% profit for your investment. The calculator also included the value you have after tax, which is $765.13. This drops your take home and your profit is now at 27.52%.
Now that you have the results, what next?
The figures don’t lie. Investing in bitcoin has far outperformed investing in shares. This is your sign to start your bitcoin journey today. And you can easily get started with Bitnob.
But it’s important to note that although bitcoin has shown so much promise, growing your bitcoin portfolio takes time. Don’t look at investment as a get-rich-quick scheme. Remember: Investing is a long-term game.