Bitcoin and mutual funds are two different types of investment options. The former one is a variant of cryptocurrency while the latter one is an open-end investment fund. Cryptocurrencies are a form of digital assets that are provided in coin ownership to individuals through a computerized system that is secured by cryptography. It is neither available in physical form nor issued by any centralized authority. This service is not provided by any bank or financial institution and its transactions are completely exchanged over the internet.
Mutual funds are investment plans which are offered by banks as well as independent financial institutions. The popularity and credibility of these funds have increased significantly over the past few years. There are a lot of plans and schemes available for one to choose from. For getting detailed information about what is a mutual fund, click here to know more.
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Introduction To Bitcoins And Mutual Funds
Bitcoin is the first-ever invented cryptocurrency which was developed by Satoshi Nakamoto in 2009. It works seamlessly through blockchain technology in uninterrupted network facilities. This digital asset can be stored online which is termed as “hot storage” and offline too, which is termed as “cold storage”. It is used as virtual money for buying assets online and there is no restriction on its value depending upon the range of its network. Although the volatility of bitcoins is extremely high, it has become a very highly traded asset.
What is a mutual fund? Well, mutual funds are created by pooling money from various investors to purchase bonds, shares, stocks, and debentures of different companies in order to earn profits. The investment options start from as low as INR 500. There are two types of investment options – SIPs (Systematic Investment Plans) and lumpsum investments. The popularity of mutual funds is at its peak in India given it comes with a bunch of benefits for the investors to reap.
How To Invest?
The process of investment in bitcoins and mutual funds are poles apart. People are well aware of what is mutual fund but not every person knows about bitcoins. This is because bitcoins do not fall under the investment category of any legally authorized financial institution whereas mutual funds are offered by many banks and non-banking financial institutions as well.
Investment In Bitcoins
Just like mutual funds, there are two ways to invest in bitcoins.
Investment for financing short-term goals – Investors who are planning to gain profits in the short-term should choose the lumpsum option and buy bitcoins in bulk and sell them as soon as the market conditions are favorable. However, this must only be used by individuals who have a high-risk appetite. This is because if one faces loss, it would be as huge as the profits were expected. Besides, the need to monitor the market conditions constantly is also a big problem.
Investment with long-term goals – For those who are comfortable withholding money in these digital coins for a long time, the SIP option is better. The problem here is that this option is very new which is why it has not yet been developed in every country.
How To Invest in Bitcoins Online?
Investment in Bitcoins is very simple today, thanks to the popularization of the internet. You have to follow a few simple steps to invest in Bitcoins online:
- The first step is to choose a Bitcoin wallet.
- Link the Bitcoin wallet to your bank account.
- Select a Bitcoin exchange. There are different Bitcoin exchanges available and you can select the one that fulfills your needs.
- Start investing hassle-free!
Investment In Mutual Funds
Well, the time has gone when people were conflicted about what is a mutual fund. It is popularly known now that mutual funds can be very profitable and enthralling for the investors who analyze the market thoroughly and make wise choices. The lumpsum and SIP schemes are both equally popular and well-developed and come with a host of benefits. The best part is that it does not require much of an effort from the investors because the funds are mostly managed by professional and experienced managers who are liable for making the investments. There are popular three types of funds options:
- Equity funds – As per the declaration made by SEBI, there are around 11 types of equity funds. Out of all these, the most popular one is the ELSS (Equity Linked Savings Scheme) fund which is also entitled to tax deductions.
- Debt funds – There are 16 types of debt funds that offer good returns at comparatively lower risk quotient. The mutual funds which make investments in debt and other money market securities are classified in this category.
- Hybrid funds – These funds are a balanced combination of both equity and debt and come with 7 types of options.
How To Invest in Mutual Funds Online?
Just like investing in Bitcoins, investing in mutual funds is also very easy these days. Gone are the days when mutual funds investment was a difficult task. With the availability of different online investment platforms, you just have to follow a few quick steps:
- Browse online to get information of different investment platforms. Select the one which suits your need the best.
- Get information on the different funds available on the platform. Now, do your own research on the performance of these funds.
- Once you get a fair idea about how certain funds are performing in the market, you can choose those and start investing in them.
The bottom line is that bitcoins are not at all legal in India. This is the biggest risk factor because of the chances of online fraud doubles-up in this case. On the other hand, mutual funds involve risks, which is inevitable in any form of investment, they are much safer because the funds are provided by registered financial institutes. Thus, if an investor has to make a choice between the two, the answer would always be mutual funds.