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NFTs vs. Hard-Asset Investing

By: Jenna Cyprus

 

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Amid record inflation, we live in a society where holding on to your wealth is vital yet an increasing challenge. People can select from many kinds of investments to retain their funds.

Among some of the newer options that individuals are pursuing are NFTs/virtual investments, while other folks continue to prefer the tried-and-true hard-asset investments of real estate, precious metals, and other collectibles. 

What are NFTs?

An NFT is a non-fungible token that uses cryptocurrency’s blockchain method to avoid counterfeiting and copyright issues. Many NFTs are created based on art designs, but this is an expanding field in which different companies are adapting the technology and concept to foster a sense of scarcity of elitism.

This is achieved by creating and releasing only a small amount of the product in order to encourage its purchase and value on the market. NFTs are a growing investment arena that have seen astronomical increases in the last couple of years.

Given their expanding amount of online trading, and the creation of a more all-encompassing online arena with the Metaverse, NFTs and their worth have definitely benefited. “In fact, sales in this space grew to more than $17 billion in 2021, a 21,000% increase from 2020′s total of $82 million,” according to Fool.com.

Art

One of the most popular NFTs, art (visual, fashion, or music/sounds), has had a lot of fluctuation and interest from a variety of individuals. Justin Bieber learned this when he invested in an NFT for $1.3 million and, unfortunately due to the fluctuation of cryptocurrency on the web, and the dive it took in the market, Bieber’s NFT fell to a value of just $71,000. 

Other NFTs that have been created on the basis of medical cards, club memberships, raffles, etc. These typically buy people a place at the table to receive care and a variety of other services. 

Best Hard-Asset Investments

Hard assets have been traditionally used as a hedge against inflation. When the prices in commodities increase due to devaluation of the dollar, purchase of certain key commodities enable you to put your money into an asset that will continue to rise in price, while the cost of your investment doesn’t increase.

This is especially worthwhile as inflation increases. These assets will be able to protect your initial investment and will keep pace with inflation, if and when you decide to sell the commodity.

Real Estate

Real estate has typically been the number-one investment to employ as a hedge against inflation. This is especially true if you own multiple properties that supply passive income when those properties are rented out. It’s no secret that 90% of millionaires invest in real estate. 

Precious Metals

Gold and silver are perennial hard assets to which investors flock in inflationary times. This is possibly due to the fact that the U.S. dollar used to be literally backed by gold, so the paper dollar we use today once represented more than paper. Gold and silver have both been valued around the world for centuries, and can be utilized in different capacities beyond just money, which gives them greater inherent value than paper.

Collectibles

Collectibles may refer to a variety of assets, the most notable being jewelry, cars, art, wine, watches, purses, antiques, and books. If you’re thinking of investing in a hard asset, it is critical to study the quality, style, and make/brand of your investment. With jewelry, it is vital to invest in high-quality pieces. Some individuals regard the brand as important, but it’s also smart to be aware that vintage jewelry, art deco and diamond cluster rings, natural saltwater pearls, and uniquely colored diamonds are typically good investments. 

Conclusion

Although NFTs are an exciting new avenue for investing, they are less proven and more prone to extreme fluctuations in value. If you pursue these investments, be advised that purchases should be pursued with greater caution, and probably not constitute the major portion of your investment portfolio.

Sticking with tried-and-true hard-asset investments is usually more beneficial and stable, but investments in general should always be diversified. 

Published: December 3, 2022
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Jenna Cyprus

Jenna Cyprus is a freelance writer and business consultant who covers business, technology, and entrepreneurship. She's lectured for several universities, and worked with over 100 businesses over the course of the last 15 years. She's a mother of two kids, and loves to go camping, hiking, and skiing with her family.

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