Every investor seeks to increase their wealth. Stocks have long been a preferred choice of investment for many people. Stockholders get dividends on their assets and if invested smartly, they can yield great returns in the long term. Stocks are usually traded on stock exchanges and these are heavily regulated in almost all countries by the relevant authorities.
Cryptocurrencies, however, are also emerging as a hot investment asset. Many people are attracted to them because the extreme changes in crypto prices can give spectacular gains in a relatively short period of time. When Bitcoin was first introduced, mining it yourself or buying it from P2P forums were the only options.
However, now there are exchanges developed specifically for cryptocurrency trading. Even many reputable mainstream brokerages have started offering crypto investments as an option to users. There are many platforms that also allow cross-asset trading i.e. trading one class of asset for another.
Using a platform that carries both stocks and cryptocurrency is a good option if you want to keep your entire portfolio in one place. Fortunately, there are several options for such people and you can easily choose a platform best suited to your needs.
Let us have a look at some such brokerages that carry both stocks and crypto for trading and investment.
What are Stocks?
Stocks are a form of security that represents a share of the ownership of the issuing company. In other words, when you buy stocks of a corporation say Apple, you get proportionate ownership in said corporation. These stocks are primarily traded on stock exchanges and the units in which they are sold are called ‘shares.’
Corporations issue stocks in order to raise funds for their operations and new ventures. On the other hand, individual investors see stocks as a means of building their wealth. They are one of the most popular forms of financial securities. Most countries have comprehensive legal frameworks in place to regulate the stock market and brokerages.
What is Cryptocurrency?
Cryptocurrencies are, in simple terms, digital tokens or electronic money. They were developed as an alternate form of payment to traditional fiat money. The major difference between fiat currencies like the Dollar or Euro and cryptocurrencies like Bitcoin is that the former is issued by a central government authority while the latter is not.
Cryptocurrencies meanwhile, are decentralized tokens based on an open-source peer-to-peer ledger technology called blockchain technology. They are decentralized coins that are not issued by a central body. Plus, unlike fiat currencies, cryptocurrencies exist purely in a digital form. It is not possible to get a physical Bitcoin or Ether.
While cryptocurrencies were developed with the aim of eventually becoming a widespread alternate payment method, their speculative nature has turned them into a popular investment option among traders looking to make huge profits by taking advantage of their extreme price volatility.
Difference between Stocks and Cryptocurrency
Both stocks and cryptocurrency today have emerged as popular investment instruments. Stocks have traditionally been the first choice of investors for long-term investments while cryptocurrencies are also being seen as a great option to diversify investment portfolios.
Both stocks and cryptocurrencies are tradable assets and have their pros and cons. Ultimately, what kind of assets you should invest in depends on your personal preferences and needs. But to decide that, you need to know the core differences between stocks and cryptocurrencies.
Ownership
Buying stocks of a corporation gives you a share in the ownership of the issuing company. This means that you are entitled to its assets and a share of its profits. However, you also have to bear the loss if the prices of the stocks you own tumble in the future.
On the other hand, buying cryptocurrency does not give you any ownership rights in any corporation. You simply own the coin and have nothing to do with the issuing entity.
Dividends and Returns
Stockholders may receive dividends on their investments as decided by the company’s board of directors. This is the company’s earnings that are distributed to the shareholders as a reward for their investment. Cryptocurrencies, however, do not pay any sort of dividend to owners. Crypto assets can, however, be staked or loaned to earn passive income.
Volatility
Cryptocurrencies are known for being volatile assets but stocks are not immune to sudden price changes either. Good news about a company can send its stock prices soaring while a scandal can just as easily bring it down. However, the kind of dramatic and sudden price changes seen with cryptocurrencies are rare in the stock market.
Therefore, stocks can be considered to be relatively stable as compared to cryptocurrencies.
Privacy and Anonymity
There are strict regulations for stock trading and you need to furnish all sorts of information and get your KYC verified before you can start trading on an exchange. Cryptocurrency trading initially did not need any ID verification but most centralized exchanges these days follow KYC norms and need to verify your identity before granting approval for trading.
However, you can still trade crypto anonymously without verifying your KYC on decentralized P2P exchanges which is not possible in the case of stocks.
Trading Platforms
Stocks, throughout the world, are bought and sold on accredited platforms known as stock exchanges. These exchanges are heavily regulated and often have to comply with strict KYC norms in order to protect the rights of buyers and sellers.
Cryptocurrencies were initially bought and sold through forums but now, specialized exchanges for cryptocurrency trading have also come up. Binance and Coinbase are examples of some famous cryptocurrency exchanges. However, you can still do P2P trades for cryptocurrency which is difficult in the case of stocks.
Regulation
Stock markets are heavily regulated in most countries. There are specific bodies that ensure that certain standards are followed while buying and selling stocks. They also devise and enforce investor protection measures. In the USA, this is done by the Securities and Exchange Commission(SEC) and by the Securities and Exchange Board of India(SEBI) in India.
Cryptocurrencies, on the other hand, operate in a legal gray area in most places. While some countries have enacted legislation for better crypto regulation and tried to bring them within the existing regulatory framework, they are not as well regulated as stocks.
Top Brokerages for Stocks and Cryptocurrency
eToro
eToro is a social trading and investment platform that has been serving users since 2007. It has 3,000+ assets available for trading and investment and serves 30 million customers across the world. eToro was one of the first places to introduce copy trading where other users could copy the strategies of top investors.
It carries stocks, ETFs and crypto and introduced zero commission stocks in 2019. This means that eToro does not charge any additional fees over the market spread. The only thing that you have to pay for is the market spread. At a minimum trade value of just $10, it is quite easy to get started on eToro.
However, note that it charges a flat 1% fee for buying and selling crypto assets. There are no fees for sending and receiving cryptocurrency though. Further, eToro also starts charging $10 per month on the available balance in your account as inactivity fees if there has been no login for the past 12 months.
TD Ameritrade
Founded in 1975, it is one of the most famous brokers in America. TD Ameritrade has a wide range of assets and investment options catering to all sorts of investors with different experience levels. It is quite a beginner-friendly platform with a straightforward pricing methodology and no minimum balance requirements.
TD Ameritrade does not charge any commission on stocks, ETFs and options trade and helps you build a diversified portfolio. In the crypto domain, while you cannot directly trade individual cryptocurrencies on TD Ameritrade, you can get exposure to the crypto market via OTC trusts, Bitcoin futures and mutual funds.
This brokerage also has a wide variety of educational resources in different formats for users to educate themselves on various topics related to investment and trading.
TD Ameritrade also supports mobile trading and has a range of advanced tools and customizable features that can be leveraged to make optimum trades and get the best possible trading experience.
Robinhood
Robinhood was seen as a game changer when it was first launched due to its commission-free trading model. However, since then a number of brokerages have gone down a similar path so it is not as much of a selling point as it used to be.
Robinhood is popular among new-age traders who seek change and innovation. It has a sleek and attractive interface and therefore, is a good option for beginner traders looking for simple trades. The brokerage features stocks, ETFs, options as well as cryptocurrencies.
You can start investing in stocks with just $1 on Robinhood. There are fractional shares where you don’t need to buy full shares and can start with very low investment amounts. Robinhood does not charge any commission fee for buying and selling cryptocurrency either and again, you do not have to buy a whole coin if you are just starting out.
Further, it keeps the majority of the user assets in cold storage and has insurance against theft and cybersecurity breaches which makes it a safe option for crypto trading.
AvaTrade
AvaTrade was founded in 2006 as a forex broker for retail traders but has since then diversified and now has around 1,000 instruments including not just forex but also stocks, stocks, commodities, cryptocurrencies and indices as well.
AvaTrade can be used on any device be it a desktop, mobile or tablet. Its trading website is available in more than 20 languages which has helped it in developing a global user base. It has around 18 cryptocurrencies available for trading at zero commissions and bank fees.
AvaTrade is a regulated platform in many places such as Australia, Japan and Europe so you can rest assured that your investments will be safe here. You can also diversify your portfolio by trading both crypto-to-crypto as well as fiat-to-crypto pairs on AvaTrade.
Swissquote
Swissquote is one of the most trusted brokers out there. It is listed on the Swiss stock exchange and is regulated by the Financial Market Supervisory Authority(FINMA) in Switzerland and the Financial Conduct Authority(FCA) in the UK. Therefore, it is one of the safest platforms for investing in any type of asset.
Swissquote supports several asset types and has millions of products for its users. Stocks, crypto assets, forex, CFDs, robo-advisory, you name it Swissquote has it. It enables you to start investing in stocks and ETFs with just CHF 5. There is also a referral program where you can get CHF 100 for referring a friend to Swissquote.
However, crypto trades are not fee-free on Swissquote. The amount of fee paid depends on the transaction amount. It follows a degressive system for transaction fees under which the lowest charge is a 0.5% fee. There are, however, a few assets available for staking which pay good rewards to users.
Capital.com
Capital.com was founded in 2016 as a global CFD broker and has since grown to have a 4+ million user base that uses its app and web platform for trading. Its headquarters are located in Cyprus and it is heavily regulated by authorities such as the Cyprus Securities and Exchange Commission(CySEC) in Cyprus and the FCA in the UK.
Capital.com is a zero-commission brokerage and it does not charge any fees for account opening, currency conversions and account inactivity. Therefore, you only have to pay the market spreads for your trades.
Most major cryptocurrencies such as BTC and ETH are available on Capital.com though you need to remember that crypto CFDs are highly speculative and risky products so you should invest in them only if you can handle high losses.
Capital.com also has a Learning Hub to educate, train and guide investors in their trading journey. It also keeps them updated on the major market news which is a big plus.
Frequently Asked Questions
Can I Invest in both Stocks and Cryptocurrency?
Yes, you can invest in both stocks and cryptocurrency. Gone are the days when you had to scour the internet and keep an eye on forums to trade cryptocurrency. Now, there are many platforms where you can simultaneously invest in stocks and crypto. Many platforms also allow cross-asset trading.
Where to Start with Stocks and Crypto?
You can start with stocks and crypto on any reputable licensed exchange. Most mainstream platforms would need to verify your ID before approving your account. It is also a good idea to consult a professional and evaluate your long-term goals and the amount of risk exposure you can take before investing in anything.
Is Crypto Taxable?
Yes, cryptocurrency is taxable. They are considered digital assets and the Internal Revenue Service(IRS) treats them the same as assets like stocks and bonds for taxation purposes. Cryptocurrencies are taxed as either income or capital gains depending on how the crypto was bought and the period of time it was held for.