Jaspreet Singh Cuts Some Bitcoin — Why It Should Make You Examine Your Portfolio

In Bitcoin’s inception, one coin amounted to less than a cent. Since then, the coin has ballooned to as high as $75,000, causing many to believe it is an excellent investment. However, some have decided to unload some of their Bitcoin in favor of other investments. 

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One of these sellers is personal finance expert Jaspreet Singh, creator of the YouTube channel “Minority Mindset.” In a new video, Singh explains why he has decided to sell some of his Bitcoin and what he’ll do instead. 

Also see other cryptocurrencies worth investing in now.

Singh’s Investment Portfolio

Singh began buying Bitcoin in 2017 at $3,035 per coin. He continued adding Bitcoin to his portfolio over the years by purchasing small amounts daily and investing more after drastic crashes. While Bitcoin and cryptocurrency have shown major gains over the years, Singh says they were a speculative part of his portfolio along with his investment in start-ups.

The value of speculative investments can rise and result in profits but can also drop significantly. While he firmly believes in blockchain technology, Singh also knows the risks. In the end, with speculative investments such as Bitcoin, you don’t make money unless you sell. 

Income-generating assets such as real estate and dividend stocks make up most of Singh’s portfolio. These assets provide him with cash flow. Unlike speculative investments, real estate offers a constant influx of cash due to monthly rent payments that help pay for the investments themselves and provide a passive income stream.

With the price of Bitcoin reaching all-time highs in recent months, Singh found that the speculative portion of his portfolio was ballooning. The coin’s high value also allowed him to sell and capitalize on large profits. Because of these factors, Singh decided to sell off a large portion of his Bitcoin and reinvest it into real estate.  

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Singh’s Investment Goal

There are many different investment strategies and goals. You may choose to continue holding and investing in Bitcoin. While it could reach $200,000 a coin or more, you also risk a potentially devastating drop down to $20,000. In Singh’s case, his investment goal is to increase his cash flow, which led him to reduce his Bitcoin position.

Converting Bitcoin into real estate benefits Singh’s goal for multiple reasons. Real estate is a hard asset that you can see, feel and touch. It comes with tax breaks and benefits, and, most important, it offers Singh an income from his investments. Conversely, having Bitcoin stored on a USB drive may have value, but it isn’t doing anything for Singh’s investment goal.

Specifically, Singh’s main investment goal is to receive a 7% cash-on-cash return. This means purchasing a property for $100,000 should result in an annual profit of $7,000 after expenses. Generating income as an investor through real estate or dividend stocks results in lower tax breaks or higher tax deductions, compounding the value of this strategy.

In real estate, investors can receive higher tax deductions through depreciation. Depreciation allows you to take the value of your property and write it off over several years. Singh explained that if he makes $10,000 in profits from his property, he can write some of it off and won’t need to pay taxes on that portion. 

Overall, Singh’s investment strategy is about stability, and cash flow provides it. Because Bitcoin is constantly fluctuating, Singh can’t predict how much money he will have in the future. A stable passive income through real estate allows Singh to map out his future finances based on his earnings projections.

The Challenges of Reinvesting Bitcoin 

Reshaping his investment portfolio may sound easy on paper, but it comes with some difficulties. Singh must first pay taxes on his Bitcoin gains, which can be a complicated matter. For this, Singh uses an accountant to ensure he’s filing everything accurately. 

On top of that, finding a good deal in today’s real estate market is also a challenge. Singh notes that the real estate market has risen significantly in the past five years, and properties are much more expensive. However, he points out that there are always opportunities for good investments out there. Because real estate will provide him with stability and cash flow, he’ll find a way to invest.

How You Should Invest

Everyone has different investment strategies and goals. If you have Bitcoin, believe in blockchain technology and expect it to increase in value significantly, it may make sense to hold onto it for the long term.

However, as Singh points out, the current high value of the coin presents a golden opportunity to reduce your position and invest in assets that will provide you with cash flow. Investing in a passive income-producing asset can give financial relief or a constant flow of funds you can reinvest into Bitcoin or other assets.

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This article originally appeared on GOBankingRates.com: Jaspreet Singh Cuts Some Bitcoin — Why It Should Make You Examine Your Portfolio

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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