If you invested $10,000 in real estate instead of Bitcoin last year, this is where you would be now

For much of the last 10 years, Bitcoin BTC/USD has driven the conversation when it comes to alternative investments. It is not difficult to understand why. Bitcoin is a perfect storm in terms of its ability to generate press and spur casual and seasoned investors to bet big on it. Many investors hailed Bitcoin as the currency of the future and cleared their portfolios to put everything in Bitcoin.

They looked like geniuses when Bitcoin hit an all-time high of nearly $68,000 in November 2021. Unfortunately, anyone who didn’t get off the Bitcoin train in November learned the hard way that Bitcoin is as volatile as it is lucrative. Bitcoin has been in freefall for most of this year. All of this begs the question, would you have been better off putting $10,000 into real estate or Bitcoin a year ago?

Bitcoin from January 2, 2021 to July 21, 2022

To assess whether $10,000 in Bitcoin or a $10,000 real estate investment was a better idea, let’s do an apples-to-apples comparison. According to Benzinga, a single Bitcoin traded for $29,405 on January 2, 2021. That means a $10,000 investment would have bought you 0.34 worth of Bitcoin, or a little less than a third of a coin.

Bitcoin posted strong gains for almost all of 2021. Indeed. it broke its own all-time high on a number of occasions during the year. The peak was a November 2021 valuation of $67,553.95. Needless to say, Bitcoin investors danced in the streets. Many of them used the profits to reinvest in Bitcoin.

In their defense, reinvesting in a high-performing offering isn’t the least bit controversial. Many investors use this strategy, both for traditional and alternative investments. But as the old saying goes: “What goes up, must come down.” Not long after Bitcoin peaked, the first glimpses of inflation began to drag down the economy, and then the Federal Reserve began to hint at rate hikes.

That’s when the bottom started to fall out. Bitcoin has basically been in a state of free fall since then, falling below $20,000 before recovering slightly to return to its current value of $23,789. That means that $10,000 (or 0.29405 ) Bitcoin you bought in January is now worth 0.23154 Bitcoin, which is about $8,100. In other words, you will be down about 19% on your original investment.

A real estate investment of $10,000 from January 2021 to now

Let’s imagine for a moment that you were a less adventurous alternative investor who wanted to put your money in something other than the stock market with $10,000 in January 2021. So instead of Bitcoin, you decided to put your $10,000 into Flagship Real Estate Fund.

The Flagship Real Estate Fund works just like a regular investment, and since it is not a cryptocurrency, you do not convert your investment capital into any other currency. The fund itself is a non-traded real estate investment trust (REIT) that has a stated goal of providing passive income to investors while allowing them to benefit from appreciation of the assets held in the fund.

The flagship consists of a diversified mix of core surplus, fixed income and opportunistic holdings from the following property sectors:

• Detached house rental
• Developments with several families
• Commercial properties

According to the fund’s historical performance data, your $10,000 investment from January 2021 will be worth $13,480 by the end of June 2022. In other words, you’ll be up almost 35% on your original investment. That’s not as high as Bitcoin at its peak, but $13,480 is 66% more than the $8,100 you’d have if you put $10,000 into Bitcoin instead of the flagship fund a year and a half ago.

A case of the tortoise and the hare

REITs like the Flagship Fund may not be as enticing as cryptocurrencies like Bitcoin, but a 30% gain beats a 19% loss any day of the week. This example is a classic case of the turtle vs. the hare. Bitcoin sprinted into the lead while the Flagship Fund booked slow and steady returns, but at the end of the run, it was the Flagship Fund that won. Timing is everything.

If you had dumped Bitcoin at the peak in November, you would have made over 600% on your original investment. If you waited for another record, you paid a high price. So if you have some capital to put into an alternative investment, you should know that real estate is still a proven winner capable of delivering impressive returns.

Looking for ways to increase your returns? Check out Benzinga’s coverage of alternative real estate investments:

Or browse current investment options based on your criteria with Benzinga’s offer screener.

Image by Stonel on Shutterstock