Every investor on planet Earth faces one crucial and in some way permanent problem: how to select the right asset that may yield a minimum level of return on invested capital. This is a fundamental aspect of the investment process for both individual and institutional investors.
The investor’s goal is to ensure maximum investment efficiency in terms of profitability and risk over a given investment horizon. To do this, it is necessary to understand how much the desired or proposed profitability is higher or lower than a certain benchmark: a generally recognized yardstick of quantitative or qualitative characteristics. So, to answer this question, we need to list the asset classes that the average depositors may invest.
Bank savings accounts
The major roadblock here is inflation. The second major parameter is the Central Bank’s interest rate. Hence, these two factors largely determine the profitability of bank deposits in any country. In countries with an endure financial system, the main function of a bank deposit is to protect savings from inflation, but not to increase their value. Although, in the context of negative interest rates in a number of states, this task is deemed to be unsolvable in recent years.
Another indicator of profitability is the stock market. The main world stock indices – S&P 500, DAX – serve as a benchmark for assessing the success of investing in stocks. In particular, an investor has the right to expect that the annual dynamics of the value of a share of an open-ended or exchange-traded mutual investment fund will not be less than the growth of the stock index for the same period of time.
Generally, stocks could be divided into 2 major classes:
- “Blue chips” – shares of companies with the highest trading volumes.
- “Second-tier” – less liquid shares, industry, for example, the banking sector or IT companies.
Compared to bank deposits, investments in stocks can generate a relatively stable income of 4 – 5% per annum. But, every investor should note that investment in this type of asset involves certain risks. With improper asset management or a market crash, you can lose your money. This is especially true if we take into account what a devastative effect 2019 – 2020 had globally on a stock market and on the economy as a whole, because of the pandemic. Stocks of many leading companies, including those from the “blue chips” segment significantly depreciated in value, and millions of depositors lost their money.
Considering these aspects, as well as the fact that a well-hedged investment portfolio requires possession of significant financial resources, this type of investment is not very suitable for people with average incomes.
Investing in crypto assets becoming more and more popular worldwide. This is partly, due to the fact that digital currency Bitcoin is becoming the new standard of the financial system. The US dollar became an international means of settlement and storage of reserves back in 1944, as a result of the creation of the Bretton Woods monetary system. American currency could be exchanged for gold at the rate of $ 35 per troy ounce. The devaluation of the dollar did its job, so in 1976 the currency was completely stopped being exchanged for this precious metal.
The result was the Jamaican Monetary System, which is still in force. However, financial crises such as the mortgage bubble of 2007-2008 showed that this system is not ideal either. Therefore, in the near future, it may be replaced again. Perhaps the new system will be associated with bitcoins, cryptocurrencies, and tokens (as a new version of stocks).
One of the main factors causing dissatisfaction with the US dollar is its high inflation as a result of economic stimulus. The Federal Reserve has “printed” trillions of dollars over the past year. These forced investors to pay attention to bitcoin, the emission of which is strictly mathematically limited to 21 million coins.
Consequently, the cryptocurrency market continues to develop actively; in the last year it has become a full-fledged participant of the financial system. Therefore, it is likely that in the future, bitcoin quotes may continue to grow, since now the industry is only at the beginning of its journey. The main advantage of a digital coin is its limited emission. Due to this, it is more investment attractive than, for example, US dollars, the emission of which occurs almost uncontrollably.
Recently, tokens have become increasingly popular among international investors. Even conservative depositors consider the possibility to devote some portion of their capital to these digital assets. Viewed by many financiers as a new form of stocks attracted billions of dollars in recent years. The reasons why investment in tokens became so popular are laid in its ability to generate high profitability. Moreover, investors do not bear any losses on foreign exchange transactions and commissions, and additionally, tokens tend to demonstrate a quick return on investment and at the same time offering a low entry threshold.
It is important to note that not all tokens show a significant increase in value and hence generating incomes for their holders, but only those that have strong fundamentals. Because there is one important feature that stands behind the corporate tokens comparing to all other investment instruments – there is a certain business process on the other side. It is the company’s ability to do business that reduces the investor’s risks. Not her reputation or just luck – but established organizational processes.
Additionally, there are different types of crypto tokens: utility tokens, security tokens, governance tokens.
Utility tokens – these tokens are designed to be used for a particular purpose, usually within the application/platform for which they are developed.
Security tokens – these tokens work in the same manner as traditional securities.
Governance tokens – these tokens are created to allow their holders to help shape the future of a company.
Some tokens that are issued nowadays and are actively traded on different crypto Exchanges are either utility, security, or governance tokens.
But, there is one good exception – Pylon Eco Token (PETN) that has features of the utility token, security, token, governance token and also could function as a cryptocurrency. Additionally, it is a deflationary token, meaning that it has a tendency to increase in value.
Moreover, 8 different business project backs this token that speaks about the strong fundamentals that are behind this asset.
After completion of all ICO phases, the price of the PETN was $ 0.12 and currently, it is traded for $ 0.80 on the XT.COM crypto exchange. This is a more than a 6-fold increase in value since September 1, 2021. It is evident that no other asset classes, like stocks, bonds, and especially bank deposits can generate such a high return on invested capital for such a short period.
We could state that the value of the Pylon Eco Token is still underestimated by the market if we consider all those factors that were presented above. Currently, PETN is traded on XT.COM and additionally, anyone could execute trades through PancakeSwap service – decentralize automated market maker. It is important to highlight that traders and investors detecting high liquidity on this instrument.
Taking into account that the management council of the Pylon Eco Token project publicly announced their intentions to list PETN on other top 20 crypto Exchanges and develop project ecosystems the price of this token will skyrocket in the future. So, those investors who assessing the potential of this project should know that it is the right time to purchase PETN tokens. Those folks who add this token to their portfolio will reap a rich harvest in nearest future.