Not only is investing in real estate popular around the world but there are many other options. However, there is no universal formula for a successful investment, so it is important to have a common understanding of the different financial instruments, know what to expect from them and make the most appropriate decision based on your expectations.
Some seek higher financial returns but also tolerate higher risks. Others, on the contrary, want to be as stable as possible when investing, which usually means lower risk and lower return. So what is the difference between investing in stocks, cryptocurrency, and rental properties?
Investing in stocks
Equities are the most popular indexes class in the United States. In this blog post, I chose to analyze the three major stock indexes and how they have changed since this year. An equity index is a statistical indicator of changes in the market value of a certain group of shares or stocks during a certain time.
· The Baltic index (OMX Baltic) has fallen by more than 8% this year.
· The European stock index STOXX 600 fell more than 5% this year.
· The S&P 500, the world's most popular stock index, fell more than 7% this year.
At first glance, such changes do not seem significant, but with the outbreak of the war in Ukraine, these figures gradually "rebounded". The S&P 500 grew by more than 4%. The stock indexes of Germany, France, and the United Kingdom, which are closely linked to the war in Ukraine and the sanctions imposed on Russia, also rose between 3% and 4%.
This example illustrates the dynamics of stock markets. Changes are happening here every day, and for some investors, it might be a hook. When they see a fall in the price of the stocks they have invested in, they do not always make the best, often too spontaneous, decisions.
Investing in a cryptocurrency
Cryptocurrencies are an utterly unregulated asset class, and some call it the world's future. Others argue that this asset class is unsustainable and may lead to the financing of terrorists and other illegal activities due to decentralization.
Looking at the changes in the most popular cryptocurrencies since this year, we see different changes.
· Bitcoin (BTC) fell by more than 7%
· Ether (ETH) fell more than 16%
· Binance (BNB) rose more than 7%
· Ripple (XRP) fell more than 12%
People who invest in cryptocurrencies associate this asset class with high earnings, and it is made for people that are willing to get rich quickly. Other options are lotteries and casino games.
Investing in crypto can really be profitable. The returns can be not only by a few percentages but even by 3 or 4 times, if not more. However, to really make money, you should probably forget logins to your cryptocurrency wallet for a while. Only then will you not be tempted to sell your investment when it triples (i.e. 300%) or so.
It is also important to emphasize that investors in cryptocurrencies have much less protection than those who invest in equities or crowdfunding platforms such as InRento. The activity of cryptocurrencies is hardly regulated.
To sum up, investing in this asset class may make a good profit, but it is a risky investment. Those looking for lower-risk products should be more interested in investing in rental properties.
Investing in rental projects
The Bank of Lithuania regulates InRento's activities. What does this mean? Strict capital requirements apply to the company, and all reports related to the investments made by investors must be submitted to the Bank of Lithuania periodically. For this and other essential reasons, investing via InRento is preferred by those looking for a lower-risk investment.
Real estate market changes are much more modest. If we have seen significant fluctuations in the stock or cryptocurrency markets since the beginning of this year, then the changes in real estate prices are significantly smaller this year.
· Vilnius + 1.7%
· Kaunas + 1.5%
· Klaipeda + 1.5%
So for those looking for a stable investment, investing in rental properties should be considered seriously. According to our customer feedback, InRento's is the right product for such investors.
The InRento product is for those:
· looking for lower-risk investment opportunities;
· focus on longer-term investments;
· whose investment choices are determined by stability.
Supervisory authorities
In conclusion, I invite you to be careful when investing. If a platform or other financial instrument offers high returns but does not explain where they come from, you may be the target of fraud. However, if you are still planning to invest there, you should first check if that financial institution is regulated by one of the supervisors. The financial institution's name should be listed on one of the following institutions' official websites.
· US - Securities and Exchange Commission (SEC);
· EU - the European Securities and Markets Authority (ESMA);
· Lithuania - the Bank of Lithuania (LB).
