BITCOIN VS MUTUAL FUNDS: WHERE SHOULD YOU INVEST?

We live in the era where an individual has several choices to make in life. One such important choice involves choosing the best investment from different types of investment offered to an investor. These investment options have a strong potential to grow your wealth as opposed to traditional savings scheme. Two such investment options are bitcoin and mutual funds. Where should you invest to ensure maximum capital appreciation? This article aims to serve as an investment guide in mutual funds vs bitcoin.

What is bitcoin?

Bitcoins are a type of cryptocurrency. These are decentralized, digital, and virtual currencies that are not regulated by any country, government, or central bank. They are stored electronically in a computer system. Bitcoin uses peer-to-peer technology to ensure quick and instantaneous payments across companies and individuals.

What is mutual fund?

Mutual funds are professionally managed investment funds that pools the money of several investors to invest it in various securities such as stocks, bonds, cash and cash equivalents, etc. that are in line with the fund’s investment objective. These funds are professionally managed by a fund manager who has in-depth knowledge and expertise to manage the pooled investment.

Mutual funds vs bitcoin

The following table summarises the differences between mutual funds and bitcoins:

  Bitcoin Mutual fund
Mode of investing Bitcoins are bought from crypto exchanges or crypto brokerage firms Mutual funds can be bought through online platforms, or through brokers, or directly from the mutual fund house
Risk profile Bitcoins are highly volatile in nature and are highly risky investments As compared to crypto, mutual funds are comparatively lesser risky investment avenues
Legal status Trading bitcoins is legal in India as of now, but they are not recognized by the government of India Mutual funds are entirely legal and highly regulated by the SEBI
Trading window Bitcoins are traded 24*7 for 365 days Mutual fund trading is time-bound
Transparency Very low transparency. Investors are still unsure whether bitcoin is a commodity or currency Mutual funds are highly transparent in nature. The NAV of mutual funds is declared at the end of each day on the website of the fund house
Withdrawal mechanism` Its not that simple and requires a lot of time It is comparatively easier to withdraw money from mutual fund investments
Cost of investing Minimal Includes various transaction fees such as exit charge, expense ratio, etc.
Ease of investing Within minutes It is easy to invest in mutual funds, however the process is quite lenghty

What is better? Mutual funds or bitcoin

Though bitcoins have huge potential to generate significant returns as compared to any other type of asset class. Hence, no doubt bitcoins are one of the most popular and best financial assets known to mankind. However, unlike mutual funds, these cryptocurrencies are not regulated. Thus, their investing process and governing laws is in stark contrast to that of mutual funds which is heavily regulated by the Indian markets’ regulator – SEBI. So, analyse both the investment options carefully and choose the one that best suit your profile. Happy investing!