- Dogecoin may experience explosive returns, but it’s an incredibly risky investment.
- However, there are other options that are much less risky and still bring returns.
The past few months have been a roller coaster ride for Dogecoin (NYSE: DOGE-EUR), with prices up more than 5,500% since the beginning of the year. And despite its recent downturn, its price has risen steadily again.
Investments like Dogecoin can be tempting because of the explosive price increases. But high-return investments are often also associated with high risk, and Dogecoin is no exception. It is harder than it may seem to make a lot of money on this investment, but luckily there is another way to make millions.
Why is Dogecoin so risky?
The meteoric rise of Dogecoin is mainly due to the fact that its passionate followers are buying the cryptocurrency in droves. The more people buy, the higher the price goes.
For now, however, Dogecoin’s fundamentals don’t match its price. Although the Dogecoin is on the rise in the cryptocurrency industry, it doesn’t have a strong competitive advantage. Cryptocurrencies in general are still very speculative and Dogecoin will have to find ways to compete with the bigger players in the industry, Bitcoin and Ethereum, if it is to survive in the long term.
That doesn’t mean you can’t make money with Dogecoin, but it is difficult. The cryptocurrency’s price gains may not be sustainable and it could crash sooner or later. If you don’t sell at exactly the right time, the price could crash and you could lose most or all of the money you invested.
The good news is that getting rich in the stock market is possible – as long as you choose the right investments. And there’s another type of investment that can make you a millionaire with much less risk – an S&P 500 ETF.
Why invest in S&P 500 ETFs?
An S&P 500 ETF is an investment that tracks the S&P 500 index and includes all stocks within this index. Many of these companies are well-known names and are also some of the largest and most successful organizations in the United States, such as Amazon, Apple, and Microsoft.
S&P 500 ETFs are also among the safest types of investments. Although they are subject to short-term fluctuations (like any investment), they have a long history of positive returns despite market crashes and corrections.
^ SPX DATA FROM Y-CHARTS.
In other words, if you invest in an S&P 500 ETF, the chances are that you will see positive returns on average over the long run. In this context, the index has a long-term average annual return of 10%. No matter how the market moves, the chances are good that your investments will recover.
How much can you make with this investment?
The best thing about investing in S&P 500 ETFs is that they are low maintenance investments that are capable of supplementing your savings. Let’s say you currently have no savings but are starting to invest $ 100 per week (or $ 400 per month) in an S&P 500 ETF. Assuming you had an average annual return on investments of 10%, here’s an approximate how much you would have over time:
AUTHOR CALCULATIONS VIA INVESTOR.GOV.
By continuing to invest for as many years as possible, your money will grow exponentially. With enough time, you could even become a multimillionaire with this type of investment.
Since S&P 500 ETFs are also investments with little effort, you can increase your savings with next to no effort. Just invest as much as you can afford each month and then sit back and watch your money grow.
Dogecoin may have a lot of hype going on around it, but it can also be dangerous. S&P 500 ETFs, on the other hand, are proven investments that involve far less risk. If you choose the right investments, you can make more than you might think – and you could even reach multimillionaire status one day.
Dogecoin may not make you a millionaire, but this investment may already have appeared on The Motley Fool Germany.
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This article represents the opinion of the author who cannot disagree with the “official” endorsement position of any The Motley Fool Premium Advisory Service. Questioning an investment thesis – even your own – helps us all think critically about investing and make decisions that will help us get smarter, happier, and richer.
John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors.
Katie Brockman has no position in any of the stocks mentioned. It has been translated so that our German readers can take part in the discussion.
The Motley Fool owns shares of and recommends Amazon, Apple, Bitcoin, Ethereum, and Microsoft. The Motley Fool recommends the following options: long January 2022 $ 1,920 calls on Amazon, long March 2023 $ 120 calls on Apple, short January 2022 $ 1,940 calls on Amazon, and short March 2023 $ 130 calls on Apple.
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