Real Assets for Real Investors: Why Bitcoin is Too Risky for Me!

Let me start by saying I am not anti-Bitcoin. I see the value of the technology, and I see a million future use potentials, but I want to “invest” my hard-earned money. For me and my money, Bitcoin (and other cryptocurrencies) are still a gamble, not an investment.

Could Bitcoin make you rich? Of course.

But, so can dropping a million dollars on “00” at the roulette table. That doesn’t make it an investment.

As Bitcoin continues its rollercoaster of popularity, some investors may be tempted to put their money into this cryptocurrency instead of traditional assets such as real estate. However, investing in real assets is still the best choice for most investors, even if they believe that Bitcoin will become the new currency in the future.

First and foremost, real assets provide tangible value that cryptocurrencies like Bitcoin cannot match. Real estate, for example, is a physical asset that provides the tangible purpose of shelter. It has a clear value in terms of its location, condition, and income-generating potential.

While Bitcoin has a purpose as a digital currency, it lacks the tangible value of income-producing assets.

We won’t even touch on the other huge benefits of real estate such as depreciation and leverage, but they are also very important factors.

Another reason why real assets are a better investment choice than Bitcoin is their long-term track record of appreciation. Real estate has been proven to appreciate in value over time, providing investors with a reliable return on investment. Bitcoin, on the other hand, is a relatively new option that has seen significant fluctuations in value over the years. While Bitcoin may continue to appreciate in the future, its long-term track record is still uncertain. And, its current volatility or lack of stability makes it a rough ride for most investors.

I have been analyzing real estate investments, personally investing in real estate, and gaining experience in the field for 15 years. I have hired mentors and learned from people with decades of real estate experience. Major tax laws regarding real estate have been in place for over 50 years. Real estate investing has a proven and stable foundation built on years of history.

By contrast, Bitcoin was just invented in 2009. Its value was only $1 per coin in 2011. Its whole experience in the world is 12-14 years old. Placing my hard-earned money into it would be like asking my 12 year old daughter to take my money and go invest it wisely.

In my brain, I don’t understand how we can have crypto “experts” when the industry hasn’t even graduated high school yet.

I get “Wolf of Wall Street” vibes watching the graphs of some new cryptocurrency shoot straight up in a single day, and then come crashing down with a single tweet. (P.S. Wolf of Wall Street hyped up penny stocks to drive their “value” sky high. Then, the insiders sold their shares, while the unknowing investor was left holding the bag).

Additionally, real assets provide investors with more flexibility than Bitcoin. Real estate, for example, can be used for various purposes, such as rental income, resale value, or personal use. Bitcoin, on the other hand, is primarily used as a speculative investment, and its use as a currency is still limited.

Most of the people who tell me that they “invest” in Bitcoin can’t even explain to me how Bitcoin works.

I usually get, “Are you kidding me? You don’t know what Bitcoin is?”

To which I respond, “I know what it is, but how does it work and how do you analyze its actual value?”

Then they respond with, “Have you seen the charts, it is going to replace all currency. It is going to the moon.”

Even if an investor believes that Bitcoin will become the new currency in the future, I still think it is better to invest in real assets today.

This is the simplest reason that I choose to invest in real estate:

Real estate can be sold for Bitcoin in the future if necessary.

For example, if I buy a storage facility today with dollars, I can sell it for Bitcoin in the future “if” Bitcoin has become the new currency at that time. This provides investors with the best of both worlds: the tangible value of real assets today and the potential upside of Bitcoin in the future.

In my mind, there are basically 2 outcomes of Bitcoin:

1. Bitcoin reigns supreme and becomes a worldwide currency that replaces the US dollar.
My apartments and storage facilities will still be a cash-flowing (or Bitcoin flowing) asset. I don’t care what piece of paper or digital currency we use to express value now or in the future. All I care about is that I have a valuable asset that I can exchange (sell) for the current currency.

When I choose to sell my asset in the future, I will receive the amount of Bitcoin that equates to the value of my apartment complex. Then, I will take that Bitcoin and reinvest it into another real asset.

2. Bitcoin flops and the US dollar lives another day.

I invested in value, and my apartments and storage facilities increased in value, they produced cash flow, my tenants paid down the mortgage balance, and I got a ton of tax benefit from owning the real estate.

Basically, just the same benefits of why I invest in real estate even if Bitcoin was never created.

The only difference: I have not lost any money to a speculative guess on what currency will replace the dollar.

If I own real assets, we can change the name of the currency 10 times. Currency is not what I care about. The value of that currency (its purchasing power) is what I care about. By focusing on real assets today, I am focusing on value. I can exchange that value for any currency in the future.

I have a very simple approach to investing. You can read the detailed version in this article, but here is the one sentence summary:

The focus is always on value, never on speculation.

I personally don’t feel Bitcoin has yet crossed the line from speculation to value.

Investing in real assets is still the best choice for most investors, even if they believe that Bitcoin will become the new currency in the future. Real assets provide tangible value, a long-term track record of appreciation, more flexibility, and the ability to sell for Bitcoin in the future if necessary. While Bitcoin may continue to appreciate in price per coin, its actual “value” as a speculative investment is still uncertain, making real assets the safer and more reliable investment option.

The rebuttal Bitcoin people tell me when I say I don’t put my money into crypto is that I am going to miss “the ride.”

My response, “I don’t invest for excitement. I get my excitement skiing a steep black diamond at Vail.”

I invest to make a predictable return on my money.

Bitcoin will find its purpose in this world.

But…

Adding excitement to my investments is not that purpose.

For now, I will stick to the tried and true strategies that have created wealth for centuries.

Mike Neubauer
CEO
Grand Vision Capital Group

*This article is my opinion. It is not financial advice, nor is it an offer to sell a security. Anyone interested in investing must first schedule a call with our team and review our private placement memorandums before investing. All investors with Grand Vision Capital Group must be accredited investors. If you are interested in investing, you can schedule a call with our team here.