Crypto vs. Index Funds: What $10,000 Invested in Each Would Look Like After 10 Years
Written by
Lydia Kibet
Edited by
Zuri Anderson
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If you have a spare $10,000, should you put it in crypto or stick with index funds? The choice depends on your risk tolerance.
If you can stomach high volatility for a high-risk reward, crypto may be the way to go. But if you prefer slow and steady returns, index funds might be a good bet.
But before you make any decisions, here’s how the two choices compare.
The Case for Index Funds
Index funds, like those tracking the S&P 500, let you own a piece of hundreds of U.S. companies. When the stock market goes up, so does your money grow. Historically, the S&P 500 has delivered an average annual return of 10.56% since 1957, according to Official Data. However, when adjusted for inflation, the returns drop to 6.69%.
If you invested $10,000 today in an S&P 500 index fund at 8% annualized return, that amount will grow to $21,589 after 10 years. At a 10% annualized return, $10,000 could grow to $25,937. So after 10 years, you’ll likely have between $20,000 and $25,000, depending on how the market performs.
While returns may seem minimal, index funds are a perfect option for you if you want:
- Diversification: You’re investing in hundreds of companies at once.
- Low-cost: Expense ratios are low compared to actively managed funds.
- Passive income: You don’t need to pick individual stocks.
- Time-tested returns: The S&P 500 has averaged around 10% for nearly a century.
The Case for Crypto
Now, let’s talk about cryptocurrencies. Bitcoin, the largest cryptocurrency by market cap, has delivered jaw-dropping historical returns. Over the past 10 years, it’s averaged around 49% annually. That’s far beyond any traditional asset class. But it’s also one of the most volatile investments you can make.
Here are a few scenarios based on different annual returns:
| Annual Return | $10,000 After 10 Years |
| 20% | $61,917 |
| 30% | $137,858 |
| 40% | $289,255 |
| 49% (historical average) | $573,700 |
That means your $10,000 could be worth anywhere between $60,000 and $570,000 if crypto continues to grow at the same pace it has in the past.
However, crypto returns come with extreme volatility. In the past five years, Bitcoin has fallen more than 70% and had several ups and downs. Besides volatility, cryptocurrencies are prone to speculation, regulation changes and market sentiments.
While the upside can be life-changing, the downside can be brutal. You could easily see your $10,000 investment cut in half or double.Â
Crypto vs. Index Funds
| Investment | Assumed Annual Return | Value After 10 Years | Volatility | Risk Level |
| S&P 500 | 10% | $25,900 | Low | Moderate |
| Bitcoin | 49% | $573,700 | Extreme | High |
If you’re looking for steady, compounding wealth, index funds are your best bet. They’re ideal for long-term investors who are risk averse but want to build wealth over time. But if your risk appetite is high and you can stomach extreme volatility, crypto may be the way to go. In both cases, make sure you invest what you’re willing to lose, as no one can predict the market correctly.
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