One perpetual question that investors — especially those in the crypto space — love to ponder is whether Tesla stock or Bitcoin holdings are a better investment. And, how do their own investments stand up against the ROI of these renowned assets?
Let’s unpack why this is such an oft-ask question, different approaches to thinking about these assets, and the best tool diverse investors can use to make cross-asset comparisons and get a handle on the ROI of every element of your portfolio.
Tesla vs. Bitcoin: Who’s Winning on the ROI Front?
Bitcoin (BTC) is famous for its ups and down. While skeptics predict the cryptocurrency will drop to a value of just $10,000 per coin in 2022, fans believe it’s well on its way to $100,000 instead. Right now, its value is just over $42,000.
But despite this level of volatility that’s practically unheard of among more traditional stocks, in the past five years the return on investment (ROI) of Bitcoin has outperformed the ROI of almost every other asset in multiple categories, from stocks to currencies, indexes, and metals.
According to Finbold’s Bitcoin ROI data collection tool, at the time of this writing, the ROI of Bitcoin has outperformed the ROI of the U.S. dollar (USD) by 4037%. The S&P 500 and Nasdaq? 2053% and 1415.29%. When it comes to stocks, Bitcoin ROI has outperformed Tesla’s (TSLA) ROI by 112.27%, Apple’s (AAPL) by 766.39%, and Google’s (GOOGL) by 1156.77%. For metals, Bitcoin ROI has outperformed gold’s (XAU) ROI by 2589.85% and platinum’s (XPT) by 3781.81%.
The constantly changing value of Bitcoin makes it hard to consistently track and understand how it’s performed over time, but the fact is that the ROI of Bitcoin is stronger than most other assets, including Elon Musk’s Tesla. But it is interesting to note that the race is close here, with Tesla boasting the lowest ROI gap out of the assets Finbold currently measures.
The Real Question — Are Tech Stocks or Crypto Holdings Better?
In our opinion, the Tesla vs. Bitcoin question is actually a proxy for a bigger debate — which is a better investment, tech stocks or crypto holdings?
Of course, “better” is subjective. The answer will depend on how you feel about various elements of each investment type, from how it impacts portfolio diversity to its potential growth opportunities, maturity, and beyond.
So let’s talk about each of those elements in more detail to help you decide whether stocks or crypto is better for you.
If you already have a ton of stocks in your portfolio, adding more isn’t going to boost your diversity any. This is why, in our opinion, for most people, investing in cryptocurrency is going to do more for your diversity (unless your portfolio is crypto heavy, which for most it isn’t).
But even though they’re different asset classes, the interesting thing about tech stocks and crypto holdings is how much the two are correlated. Often, the value of both are impacted at the same time, since they’re both influenced by the tech market. So in the grand scheme of things, it might not make that big of a difference in your portfolio diversification which you choose to invest in.
And Bitcoin and Tesla in particular are even more in tune, as, at the end of 2021, Tesla’s Bitcoin holdings were worth around $1.99B. And, while it doesn’t at the moment, Tesla did at one point accept Bitcoin as a payment for its vehicles.
Read up on why portfolio diversification should be one of the main factors in choosing your investments.
Stocks can certainly be volatile, but pretty much across the board cryptocurrencies are very volatile. For some investors — namely those with a long time to hold investments — a high level of volatility is acceptable if the asset is generally on an upward trajectory. But for others, extreme volatility can be undesirable. Think about your risk threshold when deciding whether stocks or crypto are more desirable on the volatility front.
Comparing Value Creation Capabilities
Cryptocurrencies on their own don’t and can’t generate any new value. Stocks are attached to companies, most of which are doing something to create value on an ongoing basis.
Because of this inability to generate any new worth, the value of crypto often comes under fire in a way the value of stocks doesn’t. Some don’t believe it has any value at all and are just waiting for the bottom to fall out. Others, such as the investment bank JP Morgan, say the value of crypto is at least overstated. For Bitcoin specifically, by a double-digit percentage.
We already know it’s outperforming stocks, but crypto is also going mainstream. The market is on fire, the infrastructure is coming together rapidly, and the biggest governmental agencies and financial institutions are sitting up and taking note. These developments lead some wealth professionals to believe crypto is a maturing investment vehicle.
Of course, stocks as an investment vehicle have been considered fully developed for quite a long time now. Maturity is kind of on the other end of the spectrum from volatility, so the outlet you choose should again align with your risk tolerance.
Comparing the Point of View
Here’s an interesting thing to consider — how does each of these asset classes line up with your outlook on life?
When stocks are wildly successful, it means the company with which they were associated was also wildly successful. In addition, outstanding stock performance typically correlates with strong economies and employment levels. It’s a positive outlook. But for crypto to be wildly successful, something different has to happen. Trust in national financial institutions has to erode. Fiat currencies have to lose power. The case in which cryptocurrency explodes even more than it already has is a rocky one.
Comparing What Matters Most: ROI
Comparing the ROI of tech stocks and crypto holdings is like comparing apples to oranges, since the value of stocks is typically portrayed in Fiat currency and the value of crypto in Bitcoin — or whatever cryptocurrency is used to purchase them. Aside from it being in a different “language” so to speak, crypto values often change extremely quickly. Typically, by the time you’ve manually found the ROI of your assets so that you can compare performance or calculate the value of your portfolio — everything has already changed.
To easily find ROI and accurately compare performance of tech stocks, crypto holdings, and everything else in your portfolio, you have to get your hands on the right kind of tool — which we’ll introduce you to now.
Use Kubera to Automatically Analyze the ROI of All Your Investments
Meet Kubera, a powerful personal balance sheet with ROI functionality makes cross-asset comparisons not just possible but automatic.
How? We built Kubera to automatically find internal rate of return (IRR is a version of ROI that includes holding time) for any asset. All you have to do is get all asset information up to date in Kubera’s dashboard, including purchase value, current value, and cash flow in and out of the asset. Kubera will automatically include the holding time and use it to calculate and display your IRR — all in your preferred currency!
With Kubera, you can instantly view and compare the IRR of every single one of your assets — on an apples-to-apples basis. And to make it even easier to understand how your holdings stand up against today’s most popular assets, Kubera also displays the performance of common indices and cryptocurrencies (S&P 500, Bitcoin, and more).
For more info on how Kubera automatically calculates and tracks IRR, check out our help center article.
But of course, there’s more to Kubera’s personal balance sheet platform than just calculating ROI. Because we integrate with several financial aggregators, our software is the best all-in-one portfolio tracking and management tool for diverse investors. Just use the modern interface to input the details of your assets. Account-based assets can be connected right to the platform so that their values are always up to date. For those assets that aren't associated with a live account — think physical goods like antiques and more — can still be added and updated in Kubera with just a few clicks.
With our charts and recap feature, Kubera’s recap view pulls together a complete view of your portfolio value and assets, so you always have the information you need to calculate progress on your goals and make important financial decisions.
To see all of Kubera’s features in action, visit the how Kubera works page.
If you already work closely with a financial advisor or wealth manager, let them know about Kubera as a tool to further streamline your financial planning process and analyze your holidings — from tech stocks to crypto holdings and beyond.