There are three big reasons why I’d rather invest in this Buffett pick any day of the week rather than any crypto.
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1. The S&P 500 has a long track record
Predicting the S&P 500’s future performance is easy because there’s decades of data to go on. In fact, since 1957, the financial index has produced an average annual return of 10% with dividends reinvested.
Although this doesn’t mean that the S&P 500 has produced these returns every year, a look at the index’s entire history shows that if you invested in it at any time and left your money alone for at least 20 years, you’d have turned a profit no matter how poorly you timed your purchase. With such a long and successful track record, I can feel pretty confident I’ll be able to earn similar returns with my own investment if I leave it alone.
Cryptocurrency, on the other hand, has been around for a much shorter time. Most people consider Bitcoin to be the first virtual currency, and it was founded in 2009. So we’re talking about just over a decade of performance history. Since I’m a long-term investor and I prefer to follow Buffett’s advice and avoid investing in anything I wouldn’t be happy to hold for at least a decade, an investment that’s so unproven makes me nervous.