Investors are often faced with a decision of whether they should invest in crypto or the stock market. In the current scenario, both crypto and the stock market present different risks and returns. Therefore, investors need to conduct a comparative analysis of both investment avenues before deciding where to put their money.

Before diving deep into the comparison, it is important to understand the terms share and debenture. Shares are a unit of ownership of a company that stands for equity. On the other hand, debentures are a form of debt instruments with a fixed rate of interest. Debenture holders are creditors to the company and do not have any ownership rights.

Now, let’s start by comparing the risk and returns of both investment avenues in the Indian scenario.

Risk

The stock market can be volatile due to the influence of several factors such as company performance, geopolitics, economic indicators, etc. Thus, a sudden dip in the market can result in massive losses for investors. Similarly, cryptocurrency is a highly speculative investment. The values of cryptocurrencies can rise and fall sharply in short periods. The crypto market has been highly volatile over the past few years. Therefore, investors must have adequate knowledge and experience before investing in either avenue.

Returns

In the year 2020, the stock market had a volatile ride due to multiple factors, such as the pandemic, US elections, and the geopolitical scenario. The Sensex (Indian stock market index) lost nearly 38% between January and March 2020. However, since then, it has recovered remarkably. Today, it stands close to its highest-ever level of 50,000.

Contrarily, in the same period, cryptocurrencies faced multiple ups and downs. Bitcoin, which reached INR 10 lakhs per unit in early 2020, faced a dip of nearly 50%. However, it re-bounced to set new benchmarks. At the time of writing, the Bitcoin value is equivalent to INR 47,82,240.

Present Calculations

For present calculations, let us consider the returns of a few popular stocks and cryptocurrencies over the past year.

TATA Consultancy Services is a leading stock in India. Its share value increased from INR 2,100 to INR 3,000 between February 2020 and 2021. The return on investment (ROI) was approximately 43%.

On the cryptocurrency side, Ethereum, the second-most popular cryptocurrency, had an ROI of nearly 750% during the same period. In February 2020, the Ethereum value was INR 15,000, and it reached a peak of INR 2,39,550 on 12th May 2021.

Another popular stock, Hindustan Unilever (HUL), had an ROI of more than 35% over the past year. The HUL share value increased from INR 2,094 in May 2020 to INR 2,850 in May 2021.

However, Dogecoin, a cryptocurrency that originated as a meme, has given its investors an ROI of approximately 54,000% over the past year. In May 2020, the Dogecoin value was INR 0.12, and it reached a peak of INR 0.66 on 8th May 2021.

Thus, we can see that both investment avenues can give massive returns to investors, but the risks are also high. It all comes down to the investor’s risk appetite, knowledge, and experience.

To sum it up, it is best to approach the stock market and cryptocurrency with caution. Investors must study and analyze the factors influencing these investment avenues. Even then, it is always wise to invest in diversified portfolios that spread the risk across different sectors.

Disclaimer: The stock market investments are subject to market risks. The investors must therefore carefully read the offer documents before investing and understand the risks associated with investing. The past performance is not a reliable indicator of future returns. The investors must fully understand all the risks involved in participating in the stock market by evaluating their investment goals, risk tolerance, and financial situation. The investors must consult their financial advisors before investing in the stock market. The article is for educational purposes only and is not meant to recommend any investment strategy. The investor must conduct his diligence before investing in the Indian Stock Market.