The Sydney property market has been red hot; could it be time to buy some Ethereum or Bitcoin?
Sydney Housing Market
It's no secret that Sydney's house prices have gone nuts in recent years.
According to news.com.au, you could buy most of an Italian village for the price ($1.16 million) of a so-so house in Sydney. Admittedly, the village looks haunted. And jobs are non-existent.
But, just you wait and see what happens when house prices crash.
Then we'll see who's laughing…
On a serious note, concerns over Sydney's property market are mounting.
Broadly, our wages are not expected to increase like they have in the past three decades. And while interest rates have made Aussies feel richer (after all, mortgages are a massive part of our budgets), I think it's unlikely official interest rates will fall from here in the near term.
So, if not Sydney's property market, where can speculators turn?
Bitcoin
Sydney Property has been good, sure.
But since 2012, the price of Bitcoin has increased from $12 to a recent high of $2,815 — that's a 23,358% increase. The entire market is worth a cool $41 billion!
However, if you truly are the inner gambler you think you are, there is a newer form of synthetic courage to get your ticker racing.
Ethereum
Since it begun trading way back in…umm, July last year, the price of Ethereum has risen from $11 to a recent high of $377. It currently trades at $285.
It's a speculator's dream.
Foolish Takeaway
At current levels, it seems the price of Sydney's housing market might have more in common with Bitcoin and Ethereum.
Peter Lynch, the famous US investor whose investment fund grew from $18 million to $14 billion (with a 'b') in just 13 years, had a few rules for looking at stock investments.
One of my favourites was this:
"If you're prepared to invest in a company, then you ought to be able to explain why in simple language that a fifth grader could understand, and quickly enough so the fifth grader won't get bored."
I think that quote applies equally to expensive property and cryptocurrencies. Lynch is saying that unless you can explain why you own something and how it will make you money – don't buy it.
It doesn't matter if 'it's only a small amount of money'. You can make truly life-changing amounts of money with a tiny upfront investment, as I showed here.
