Why It Pays to Invest in the Current Situation – 3 Reasons

The global macroeconomic situation, as well as the situation in the various financial markets, has not been easy in recent months. Rising food, commodity, and energy prices have had a significant impact on household consumption and consumer preferences in recent years, and central bankers have tried to respond to this situation by raising interest rates to curb high inflation.

In the following article, we have prepared three reasons why it is worth investing in the current market situation.

Inflation Reduces the Purchasing Power of Your Money

Although many people may not realise it, inflation directly reduces the purchasing power of money over time. This is not because your €50 note has changed the numerical value that is stamped on it. Inflation manifests itself by the rise in the price level in the economy, i.e. the rise in the prices of individual goods and services.

Let’s look at an example. If one yoghurt in the grocery store cost €1 last year and its current price is €1.10, this means that the year-on-year inflation rate is at 10%. One of the best-known examples of the impact of inflation is the measurement of the price of milk in the United States. In 1913, a gallon of milk cost about 36 cents a gallon. A century later, in 2013, a gallon of milk cost $3.53 – almost ten times more.

Keeping your money in a bank account or under the bed depreciates its value due to inflation. The best way to protect your money from inflation is to invest it.

Technologically and investment-wise, the most progressive asset class is definitely cryptocurrencies. Investors who invested in cryptocurrencies five or ten years ago have been able to effectively protect their funds from inflation and, at the same time, make a handsome profit. Case in point:

• If someone invested in Bitcoin ten years ago, they were able to generate a return of up to 13 thousand percent on their investment. At the beginning of February 2014, one Bitcoin was trading for 500 USD, while its current value is more than 66 thousand USD.
• If someone invested in Bitcoin five years ago, they were able to earn over 1100% on this investment. At the end of April 2019, one Bitcoin traded for approximately 5,500 USD, while its current value is more than 66 thousand USD.
• Even an investor who only entered the cryptocurrency market in early 2023 would be able to protect his funds from inflation with great ease. In fact, at the beginning of 2023, Bitcoin was trading at $16,600, which at the current price level means a return of up to 297%.

Even though you may have entered the cryptocurrency market later in life and your investment is currently losing money, keep in mind that five or ten years from now, you may be in a similar situation to investors who got on the cryptocurrency train at the beginning.

Many Cryptoassets Have Fallen Tens of Percent From Their Highs

Cryptocurrency market declines are an ideal way to average investment costs. If you bought cryptocurrencies at the peak of the market cycle and are currently in the red, now is the perfect time to average your investments.

That’s because several cryptocurrencies have plummeted tens of percent from their highs since November 2021, when Bitcoin and several altcoins reached their all-time high (ATH). It is realistic to assume that several of these cryptocurrencies will regain their new record highs in the coming months or years, which in some cases may be several times higher than their previous highs.

However, it is also the case that some of these cryptocurrencies will fail and may never reach their record highs again. Fumbi has prepared an overview of the top selected cryptocurrencies and their evolution from the price peak to today’s prices.

Asset Prices Are Quoted in U.S. Dollars as of 23.4.2024

Source: Fumbi

As can be seen, the top cryptocurrencies, especially altcoins, are still down significantly from their previous price highs. These massive drops present a great opportunity for investors to buy these cryptocurrencies at a huge discount. Should prices reach the same levels as they did in November 2021 again, investors can easily see their investments appreciate several times over.

One of the main advantages of investing through Fumbi is that Fumbi does one of the important and time-consuming activities for you. Our experts monitor cryptocurrency market developments and news on a daily basis and, based on this, make quarterly updates to our flagship product, the Fumbi Index Portfolio, to provide clients with a portfolio made up of the top cryptocurrencies in the market with the highest technological and growth potential. As a result, your portfolio in Fumbi follows the current trends in the world of cryptocurrencies.

Start Saving for a Better Future

Furthermore, downturns in the cryptocurrency market are a great opportunity for everyone to think about and start saving for their future. Your future depends on the investments you make today. The most important thing to remember is that the earlier you start investing, the more money you will accumulate over the years.

When you put your money in a regular savings account, the money you have there will earn interest at a very low rate that won’t even cover the rate of inflation. In the long run, it’s much more efficient to diversify your investments into different asset classes such as bonds, stocks or cryptocurrencies. However, it all depends on how much risk you are willing to take.

Risk tolerance means how much you can withstand and tolerate in terms of asset price fluctuations when investing. If you can’t handle a high level of risk, our dynamic Bitcoin and Gold product, which combines assets from two popular asset classes – gold from the commodities market and Bitcoin from the cryptocurrency market – may be suitable for you.

If you want to take higher risks to potentially achieve higher returns, our Fumbi Index Portfolio, made up of the best cryptocurrencies in the market, will be the optimal solution for you.

Two basic principles are important in investing – regularity and discipline. The best way to prepare for your future is to set an investment goal and try to invest regularly. Investment discipline should not be forgotten either. Stick to your strategy and don’t sell your assets at a loss under the influence of emotions.

At Fumbi you can invest quickly, easily, and efficiently from as little as €50.