Is Bitcoin The Best For Funded Investment In Foreign Exchange Trading: Some people may be thinking, “I want to buy Bitcoin in a funded manner” and “I want to know the advantages and disadvantages of making a funded investment in Bitcoin?”
On the other hand, many people may think that Bitcoin is not suitable for funded investment due to its volatile price movements.
This time, I will explain in detail what the funded investment of Bitcoin is, the advantages and disadvantages.
What is Bitcoin funded investment In Foreign Exchange Trading?
Funded investment is one of the investment methods of purchasing the same financial product for a certain amount or more every month.
It is said that there is a high possibility that stable profits and results can be obtained because you can start with a small amount of money and invest in it over the long term.
The point of funded investment is to purchase the same thing for a certain amount regularly.
By doing so, it is possible to diversify the purchase time and reduce the risk of price fluctuations due to the purchase timing.
Use Bitcoin for funded investment
Like investment trusts, you can make a funded investment by purchasing a fixed amount of Bitcoin every month. You don’t have to take any special steps, just buy it regularly.
In addition, funded investment has the advantage that it does not require the transaction screen to be open in front of the personal computer at all times, and it does not take much time.
If you are interested, you should start with a small amount, as you only invest a certain amount of money in Bitcoin that does not burden you on the payday.
Simulate Bitcoin funded investment
Now, let’s simulate how much it will be in the future, assuming that you made a funded investment with Bitcoin. Here, I tried to simulate the movement of Bitcoin in the past.
First of all, the price of Bitcoin on April 1, 2020, was around 700,000 INR. On the other hand, the price of Bitcoin as of April 1, 2021, is around 6 million INR.
From April 1, 2020, to April 1, 2021, I calculated how much it would be if I made a reserve investment of 10,000 INR on the first day of every month for one year.
In this way, it is calculated that by investing 10,000 INR every month for one year, we were able to obtain an amazing profit of 324% per year.
It is calculated that 120,000 INR will be more than tripled to 500,000 INR in one year, which is an unthinkable yield for other funded investments.
However, it is an amount derived from price movements over the past year, and it is not possible to predict what will happen in the future.
However, many people may find it attractive to invest at least a certain amount in Bitcoin every month.
Advantages and disadvantages of Bitcoin funded investment
What are the advantages and disadvantages of Bitcoin funded investment? We will explain each in detail below.
Benefits of making a funded investment with Bitcoin
The advantages of making a funded investment with Bitcoin are as follows.
- You can start investing with a small amount of money
- You can leave
- it alone without spending
- time on investment
- Time diversified investment is possible
- Trading is possible 24 hours a day, 365 days a year
You can start investing with a small amount of money. One of the attractions of Bitcoin is that you can start investing from a small amount.
Major stock investment in investment may require a large number of assets even if you want to do it, but Bitcoin, which is a virtual currency, does not need a large amount of money.
Depending on the exchange, you can start from 1,000 INR, so even those who do not want to save a large amount of money can easily start.
You can leave it alone without spending time investing
The big advantage of funded investment is that you don’t have to check transactions and prices one by one.
Many people have the image that investment requires checking information every day to make a transaction, but funded investment does not fall under that category.
You can invest a certain amount of money at a fixed frequency and leave it alone, so even those who do not have time can work with peace of mind.
Time diversified investment is possible
Time-diversified investment is the greatest merit of making a funded investment.
For example, if you buy Bitcoin to the limit that you can buy in one transaction, you may lose a lot of money when it crashes.
On the other hand, if you buy Bitcoin at various timings, the price will differ depending on the timing, so you can diversify your risk.
The most important feature of time diversified investment is to reduce the risk due to the purchase timing by diversifying the purchase time.
Bitcoin, in particular, is likely to rise in price over the long term, but on the other hand, it also carries the risk of a plunge, so it is very important to minimize the risk of purchase timing.
Available 24 hours a day, 365 days a year
Bitcoin and other virtual currencies have the great advantage of being able to trade 24 hours a day, 365 days a year.
The most major stock investment in asset management can only be traded from 9:00 to 15:00 on weekdays when the market is open, and it is difficult for busy people such as office workers and office ladies to get their hands on it.
In addition, FX, which is popular in asset management, is also traded only on weekdays, and the market is closed on Saturdays and Sundays, so general working people can’t secure trading time.
However, since virtual currency trading is possible 24 hours a day, 365 days a year, even those who are busy with work on weekdays or who can only take time on holidays can flexibly trade according to their lifestyle without being tied to time.
Disadvantages of making a funded investment with Bitcoin
The disadvantages of making a funded investment with Bitcoin are as follows.
- May cause losses
- Leveraged transactions can result in large losses
- High tax rates
May cause loss
In particular, Bitcoin often crashes, and there are many unstable parts, so it is better to be prepared for loss.
However, with funded investment, you do not have to worry about a temporary collapse because you will invest a fixed amount by diversifying your time.
Investors who trade every day are the ones who are concerned about the large loss caused by the crash, and long-term funded investment can wait until the price returns.
Keep this perspective in mind, as a long-term investment is important for funded investment.
Leverage trading can be costly
With Bitcoin, you can choose a special trading method called leveraged trading. Leveraged trading is an investment method that allows you to trade more money than you have deposited.
For example, if the leverage is 5 times, you can deposit 1 million INR and use 5 million INR worth of Bitcoin, but the loss will increase accordingly.
It is important to note that the price of virtual currencies is more volatile than other investments, and the price of Bitcoin may rise sharply or fall at once.
When making a funded investment, try not to choose leverage trading as much as possible.
High tax rate
When making a funded investment in Bitcoin, be sure to consider the “tax return” after making a profit. Under several tax law, profits acquired in virtual currency are treated as “miscellaneous income”.
Income from miscellaneous income is subject to a progressive tax system in which the tax rate increases as the income increases and the tax rate is 5 to 45%.
In addition, when filing a tax return, you have to pay 10% of the residence tax, which can increase up to 55% in total.
On the other hand, profits obtained from stock trading and FX are subject to separate tax filing, and the tax rate is 20%.
You can also carry forward the loss in the transaction for up to 3 years, so if you lose in the next year, you can reduce the income tax by deducting the loss.
Compared to stock trading and Forex, the tax system for virtual currencies is not yet in place, so one of the disadvantages is that the profits that remain on hand are reduced.
As introduced this time, Bitcoin funded investment allows you to start investing with a small amount of money, and you can trade according to each lifestyle without being tied to time.
Even if it seems that there is a loss in the short term, it is possible to make a large profit if it is a long-term transaction by funded investment.
Let’s manage assets efficiently with a funded investment that allows you to flexibly determine the number of reserves according to your assets.
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