Cryptocurrencies or property ­– what’s the better investment?

Age and experience are shown as key to making good investment choices

If I asked you what is better as an investment – cryptocurrencies or property – your answer may depend upon your age:

  • The older you become, the wiser and more conservative you become. It’s called experience.
  • The younger you are, the more cavalier your investment attitude is likely to be. You’ve had fewer (if any) financial setbacks, and you have longer to make your money before you retire.

Two recent studies back up this generalisation. Together, they make interesting reading.

35% of people in the UK think property is the best investment

Perrys Chartered Accountants quizzed 1,000 people and found that 35% of them are more confident in property as an investment than any other asset. This includes tax-efficient ISAs and pensions.

The survey also found that 8% of people are relying on their home to provide them with income in retirement. Last year, research by Halifax found that the average net equity in a home is £247,233. Admittedly, this is skewed upwards by property values in London and the South East, but it is also about £200,000 more than the average pension fund at retirement.

74% of younger people believe other investments are better than property

Get Living has also conducted its own survey. This one, titled ‘Millennial Living 2018: insights into the build-to-rent sector’, questioned 21- to 35-year-olds. It found that almost three quarters believe that there are better investments than property.

An incredible 21% of these think that cryptocurrencies are better to buy than properties. Admittedly, Bitcoin, the biggest cryptocurrency of them all, is up around 400% since January 2017. Perhaps the millennials have a point? Until, perhaps, you look at the volatility of Bitcoin and other cryptocurrencies. For example, if you had put £200,000 into Bitcoin in mid-January 2018, it would now be worth less than £75,000. Oops…

Almost half of homeowning millennials say it is better to rent

Young people who have bought their own home are advising their peers to stay put in rented property. The Get Living survey found that:

  • 37% found that the value of their property dropped in the first 12 months
  • 57% underestimated the costs of buying their own home
  • 45% have found their monthly costs are higher than when they were renting

The advantages of renting include flexibility to relocate and lower commute costs, because they can live nearer work.

Almost half of millennial homeowners would rather turn the clock back and continue to rent.

What do these surveys tell us?

Reading these two surveys together tells us much about experience. I doubt that too many of Perrys’ survey respondents were in their 20s. Those who have experience of investing in different assets and investment vehicles are more likely to choose property as their investment of choice. Younger investors are more easily blinded by get-rich-quick schemes and highly speculative investments.

I know one such youngster who was paid for a job in Bitcoin around two years ago. The job he did was valued at £3,000, and he was paid with seven bitcoins. In January, those coins were valued at around £91,000. I asked him what he was going to do with them, and why not sell them to invest in property. He said he had been told each bitcoin would be worth more than £75,000 by the end of 2018.

Today, my young friend’s seven bitcoins are worth a total of £33,000, or around £4,500 each. He’s holding on to them because he is convinced that their value will soar. He’s banking on them being worth around £500,000 by the end of the year! Oh, the confidence (or is it recklessness?) of youth!

When experience creeps into the equation, it is stunning how quickly opinions can change. For example, many youngsters who have bought their own home now regret doing so. They wish they were still renting. And that’s good news for buy-to-let investors – the older, or more experienced, or savvier and conservative people, who understand that the highest returns are made from long-term investments in solid, tangible assets, with a good history, and backed by strong fundamentals. They’ll probably be letting their property to Bitcoin investors for a long, long time.

It pays to read the property news, and decipher the surveys, research, and analysis in the market. Get in touch with one of the Gladfish team and sign up for the Gladfish Newsletter to stay abreast of all the property investment news that matters. We give it to you straight. No BS. No hype. Often, before it becomes news!

Live with passion

Brett Alegre-Wood

Brett Alegre-Wood
July 17, 2018


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