How to Invest $100 to Make $1000 a Day
Many, even those who have never been interested in investments, are starting to invest today. Those who are trying on their own to beat rising prices and keep their savings are often faced with a choice of investment methods, and there are countless of them.
From a simple deposit in a bank, to investing in shares of your favorite company or even in cryptocurrency, these three types of investments can be called the most common today.
Investing is becoming increasingly popular in the modern world, many people choose it as a passive form of income. If you are a beginner who is wondering how to make $1000 a day – this guide can be helpful to you.
What Is the Difference Between Stocks and Cryptos?
The cryptocurrency market is extremely volatile. Digital asset prices can skyrocket or collapse incredibly in just a few minutes. When choosing a cryptocurrency for investment, you take a risk. However, large fluctuations in price can also bring large returns.
Stocks are also volatile, but not as high. Traders base their decisions on information about the company whose shares they buy, and their price changes during the day trading session. In general, the stock market in the long run shows an upward trend.
At the same time, the value of cryptocurrencies depends on what happens in the crypto industry and in the stock markets. Cryptocurrencies also affect the value of each other. For example, following Bitcoin, large altcoins often rise or fall. Also, the cryptocurrency market works around the clock, and prices change every second, driving traders crazy.
Cryptocurrencies, with the exception of Bitcoin and large altcoins, are less liquid than stocks because they do not have such high trading volumes. There are fewer active buyers in the cryptocurrency market than in the stock market.
By buying shares, you not only receive profit from them, but also become a full-fledged owner of a share in the company and can take part in its management. However, for this you need to have an impressive package of securities, so more often than not, shares are bought exclusively for profit. When buying cryptocurrencies, you simply become the owner of a token.
Are There Similarities Between Trading Stocks and Cryptocurrencies?
The principle of trading stocks and cryptocurrencies is approximately the same. If you have already tried stock trading, then it will be very easy for you to get used to the crypto exchange. All transactions are carried out online, the types of orders are the same (market, limit, stop loss). The general technical analysis of cryptocurrencies and stocks is almost the same.
Spot trading in digital assets is similar to intraday trading in securities, where buyers speculate on the stock price. In both cases, similar strategies for short-term investments apply.
What is More Suitable for Short-term Investments?
The potential for short-term investment in cryptocurrency seems to be much higher than that of stocks. You have a great chance of quickly making high profits when trading digital assets due to constant price fluctuations for them. But remember, equally, you run the risk of instantly going into the red. Cryptocurrencies are volatile and are more suitable for short-term investments if you want to make a quick profit.
What is More Suitable for Long-term Investments?
Securities are more stable and predictable than digital assets, so investors are more likely to choose them for long-term investments. However, you can also use promising cryptocurrencies for long-term trading. It is not necessary to buy a coin in full, you can buy a tenth or a hundredth of it and keep it in your portfolio as a reserve asset.
Stocks vs Сryptocurrencies: Pros and Cons
Cryptocurrency attracts many novice investors due to a number of advantages, including:
- the ability to trade around the clock;
- large amounts of leverage;
- low commissions and thresholds for transactions.
The advantages of stocks include:
- prospects for the overall growth of the stock market;
- not as strong price changes as for crypto assets;
- deep liquidity.
As for the cons, stocks are more influenced by events taking place in the world (inflation, monetary policy, geopolitical disputes, etc.). But, as a rule, a balanced portfolio reduces the risk of losing money.
Digital assets are less dependent on the global economy, but it should be borne in mind that the crypto market in most countries is not regulated by law, and somewhere digital assets are generally prohibited. For example, in September 2021, in China, any actions with cryptocurrencies were declared illegal. Russia in 2022 was also considering options for banning cryptocurrencies. The US does not yet plan to impose restrictions on the crypto industry, but the government still cannot come to an unambiguous decision. Today, only in one country in the world – in El Salvador – Bitcoin is legalized and recognized as an official means of payment.
Also, the disadvantages of cryptocurrency include the fact that the crypto industry is largely subject to hacker attacks. Stocks are more stable and liquid, but less profitable in the short term. Cryptocurrencies provide an opportunity to make a quick profit, but just as quickly you can be at a loss. In addition, the crypto industry has not yet received support in many countries and is often banned.
Cryptocurrency has no guarantees, but its profitability can be much higher. Investing and trading cryptocurrencies requires an account on a crypto exchange, a payment method, withdrawal of funds and time to trade. And this investment functions in the same way as stocks and many assets: the price of cryptocurrencies is unstable. You can make a profit if you buy cryptocurrency cheaper and sell it more expensively.
The value of a cryptocurrency is determined by the fact that it can be both a store of value and a means of payment, in addition, its value is determined by its limited quantity, as well as the demand for it. To simplify, the price of a cryptocurrency depends on its usefulness: if the technology develops and the cryptocurrency becomes more popular, then the price of it can grow.
You need an appetite for risk. Nobody guarantees anything to the investor. Most observers of the cryptocurrency markets will agree that the volatility of cryptocurrencies is a completely different league. You just need to look at historical charts to see these rapid declines and peaks in prices.
There is always a risk that the crypto project you invest in will not succeed. The price of a cryptocurrency can fall sharply and grow just as sharply. Cryptocurrencies are in the early stages of becoming an asset, which is why such situations occur.
There are also thousands of blockchain projects and the competition is fierce. Only a few of them will end up being successful. Also, the actions of government regulators create a risk: they look with suspicion at a market that they cannot fully control.
By investing in cryptocurrency, there is a chance to get rich. Just as an investor can lose his investment in cryptocurrency, he can also increase it. You can take advantage of fluctuations in the price of cryptocurrencies. The higher the volatility of an asset, the more you can earn – and in this, cryptocurrencies have no competitors. Popular cryptocurrencies over the past year have shown growth from 250% to almost 3000%.
By investing $1000 in Bitcoin, over the past 3 months you could get $2000, and in a year – almost $9000. Ethereum over the past year would have given $14,000 in the end, Litecoin – $5,000, Ripple – $2,500, and Dogecoin would have brought almost $30,000 to its investor in a year.
To predict the price of a cryptocurrency, you do not need to be an expert in the relevant field yourself. In fact, the system of growth and fall of its price depends on the events in the world, the demand and the work of the project. If you observe this process and respond to events in time, the investor can either end up with a loss or get a fairly significant profit.
Bank Deposits – Very Reliable, But Not Very Profitable
A deposit is one of the most common types of investments: it is safe and requires a minimum of time and effort. Everything works simply: you bring money to the bank, put it on a deposit, and after a while you get your money and profit – a percentage. How the bank uses the money depends on its policy, but the most common method is to lend money from your funds to other people.
For its part, the debtor provides collateral and pays the bank interest on the loan: for example, 10%. As a result, for the year of using the money, he returns to the bank 110% of the amount. The bank keeps 5% for itself and the remaining 5% goes to the investor as a percentage for the deposit.
If an investor decides to put money on a deposit, he needs to choose a bank and a program, bring money and pick it up at the end of the term. This can also be done online, making the process even easier. For such simplicity, the investor receives one of the most important disadvantages of deposits – their low profitability.
In comparison to bank deposits, stocks are less reliable, but more profitable. Having a share of ownership in a company is not only prestigious, but also profitable. Most companies do not stand still – they develop, increase sales of goods and services, optimize production. When everything goes according to plan, their profits increase, which increases the value of the shares. An investor makes a profit by buying shares cheaper and selling them more expensive.
If the company develops, even the most common increase in the price of shares can be greater than, for example, the return on a deposit. In some cases, companies show tens of percent growth, and in special cases, hundreds.
Shares of companies can behave differently, and therefore reliability is lower. Stocks can behave in different ways, and their price growth does not always go according to plan. Before a stock rises in price, it can repeatedly fall in price. There are many nuances that affect this process. To choose the right company for investment, you need to collect information about what is happening in the market, constantly monitor and analyze it.
Investing in stocks works by increasing their value over time – this is the main aspect that you should pay attention to. If you invest in stocks wisely, then their annual yield can easily reach 12-15%. Of course, there are exceptions – 50%, 100%, and even 500%.
So, for example, if you invested $1,000 at the beginning of last year in Facebook, you could get $1,500 at the end of the year. TSMC would have brought its investor $2,000, and Tesla shares would have made it possible to receive $5,000 altogether. In a word, with the right choice of stocks in the long run, the investor will always remain in the black.
On the one hand, this is a risk, and on the other hand, an opportunity to earn more it is always worth remembering that investing in stocks is completely dependent on market forces. Even if an investor has deep knowledge of the market and is willing to take risks, he cannot always get a guaranteed profit. It can be a windfall, but not always.
This investment vehicle is better suited for people with a high risk appetite. An investor's propensity to take risks should be determined by how well he can handle financial losses. Therefore, he should not forget about risk diversification.
If the investor is a beginner, it would be wise to invest a small amount of money first to test your options. But if an investor does not really like to take risks, then mindful of his financial condition, it is better for him to stay away from the stock market.
What Is the Best Investment?
There will never be a universal answer to this question. The direction of the investor should reflect his goals and opportunities. If the goal is to keep money from inflation, but the investor doesn't have the time or desire to control their investments, then a bank deposit is a good option. It's simple, fast and uncomplicated. Such an investment will allow you to receive a minimum real profit.
If an investor wants not only to keep his savings, but also, possibly, to increase them, a bank deposit is not enough. Only the profitability of stocks and cryptocurrencies can help an investor multiply his investments. You can get a real plus only by spending time and effort on finding a suitable asset and investing in it.
Although shares are securities, in the modern world they almost never go in the classic form of securities proper and exist in non-documentary form. An investor who does not want to waste extra time and engage in "live" trading can now use the services of special platforms.
Bitcoin (BTC), which is known as the very first and most attractive cryptocurrency, has experienced several periods of ups and downs throughout its existence.
So, the first "tops" were reached in 2017, when $19K were asked for one Bitcoin. Then the crypto winter followed – the price tag fell to $3,2K. The second cycle of growth in 2019 showed a mark of $12.1K, but with another fall to almost $5,5K. Then the growth cycle began again, and the record value of BTC came at the end of 2021. But since then, the landscape in digital markets has changed markedly.
According to the MyFin portal, the highest value of the world's first cryptocurrency was reached on November 10, 2021. At that time, you could get $66,103 for one Bitcoin. For comparison, on November 9, 2020, BTC was worth $15,415. That is, the annual growth amounted to almost 429%.
However, since then, Bitcoin quotes have been gradually falling down, sometimes bouncing up a bit. As of December 23, 2022, the price tag has completely dropped to $16,836. And on December 23, 2021, Bitcoin was worth $50,919 – that is, the price fell three times in a year.
It turns out that in the case of buying BTC at peak values, investors could lose about 75% of all their investments in this cryptocurrency. And when buying exactly a year ago, the losses would have been 67%.
The value of cryptocurrencies depends on the market interest of people who invest in them. At the same time, digital assets are a speculative instrument – their price is subject to large fluctuations and risks. In the current environment, when investors' cash reserves are shrinking and markets are suffering losses, interest in such high-risk investments is declining. Investors in such conditions prefer to keep money in more reliable instruments: gold, bonds, bank deposits. And they usually close high-risk positions – that is, they sell shares, cryptocurrency and other assets. Therefore, it is possible to expect a strong growth of Bitcoin and other cryptocurrencies in the event that the global economic crisis subsides, and the securities markets begin to recover.
So far, the digital asset market cannot compete with the stock market in terms of liquidity. Investors need to have instruments that can be converted into currency or other assets at any time. But many investors and traders have really begun to cautiously enter the crypto market. However, even the most risky players allocate no more than 10% of their portfolio to digital assets. Conservatives invest in cryptocurrencies even less – up to 6% of the portfolio. The reason is too high risks and a very real probability of losing money.
Due to the decentralized nature of cryptocurrencies, anyone can become a market participant. The method of direct investment in digital currencies through trading platforms, through brokers, mining or participation in decentralized (DeFI) projects. The cryptocurrency market in terms of its capitalization is much smaller than the securities market. With low barriers to entry and volatility, players who manage their business wisely in this relatively young and ever-expanding market can reap impressive profits.
We are now in the stage of accepting the fact that cryptocurrencies are likely to be with us for a long time. Virtual coins have a fundamental backing of value, a capitalization of billions of dollars, and a gradual inversion into the payment systems of the world. Therefore, many traders and experts argue that investors are leaving the stock market, preferring to hedge their financial assets on the stock market into the digital financial assets market.
Analysts are waiting for the continuation of the cryptocurrency winter, so they act in the market with great caution. The correlation with the stock market is also important, since if there is a fall in the stock market, then the cryptocurrency market will most likely also go down.
Against this background, the main advantages of cryptocurrencies compared to securities are the completeness of ownership, digital nature and the prospect of technology. And if not everyone enjoys full ownership, preferring to keep funds on exchanges, then the prospects of the market and technology are understood by an increasing number of investors every year.
There is definitely no outflow of capital from the stock market to crypto exchanges, but it’s worth taking a closer look at crypto assets, because they allow not only to bypass any restrictions, but also save financial assets during a big crisis.
The general investor sentiment in the digital asset market has certainly been hurt by the recent crash of the FTX cryptocurrency exchange, as well as previous high-profile crashes (Terra ecosystem, Three Arrows Capital, Celsius) and blockchain-based hacks. When asked about their views on cryptocurrency prices, 83% of institutional investors from the Institutional Investor Custom Research Lab survey responded that they see prices trading in a range or trending lower over the next year. However, 71% of them expect the value of assets to increase in the long term.