Choosing a high or low risk investment

The price of Bitcoin, Ethereum and other cryptocurrencies have plummeted in the last 24 hours, while interest rates on time deposits are on the rise again. Investors looking to grow their savings may be wondering whether high-risk or low-risk investments are better for their finances in 2022.

Around $400 billion was erased of the combined crypto market since Friday, triggered by US interest rate hikes, declines in stock market value and other factors.

In the last 24 hours alone, the leading cryptocurrency, Bitcoin, saw a sharp decline in value from $5,899.20 to $43,419.84. Not only is this the lowest it has fallen since July 2021, but it has also fell 50% from its highest peak in November 2021.

This latest drop could cause a ripple effect for other major cryptocurrencies. Ethereum is also down $446.73 in the last 24 hours. BNB from Binance, Solana, Cardano and XRP from Ripple also lost between 15-20% since Friday.

Meanwhile, one of Australia’s lower risk investment options, time deposits, appear to be on the upswing. After a decade of falling interest rates, the Reserve Bank of Australia raised the cash rate and lenders are transferring this to their deposit accounts.

In many cases, banks do not pass the rate increase on to savings accounts, instead simply focusing on raising interest rates on time deposits. Australia’s largest bank, CommBank, did not pass on the rate hike to savers, but instead he offered an “olive branch” in the form of a new competitive term deposit.

So for Australian investors wondering where to put their funds in 2022, the question may be whether it is better to gravitate towards a riskier but more volatile investment such as cryptocurrencies. Or one that offers less reward for more stability and security, like time deposits?

Bitcoin vs Big Banks: Comparing High or Low Risk Investments

Investment risk has to do with the fluctuation and volatility of returns that you are comfortable with and prepared to accept when it comes to your money.

Generally speaking, riskier options can deliver higher returns when conditions are in your favor, but if a market crashes or there is a recession, the downside can be severe. And low-risk investment options may not offer the highest immediate returns, but they can offer stability to your portfolio over a long period of time.

Yahoo Finance reports that Bitcoin saw returns of more than 70% in 2021, outperforming both the S&P 500 and gold in the same period. Whatever your opinion of cryptocurrencies, it is clear that for some there has been an opportunity for high returns.

Everyone seems to have an opinion about the level of risk involved in investing in cryptocurrencies. Ultimately, it’s a personal decision as to what level of risk you’re comfortable with, but it may be worth exploring ways you can invest in crypto with less risk.

First of all, focus on the fundamentals. Take your time to research exactly what cryptocurrency is and how it works. There are numerous resources available online to get you up to speed.

Storing your cryptocurrency is also more difficult than owning other investments, such as stocks or bonds. You will need to carefully choose a cryptocurrency exchange, such as Coinbase, when buying or selling your assets.

These exchanges are vulnerable to being hacked, which is another risk to consider when investing in cryptocurrencies. You may want to consider using ‘cold storage’ options like a cold wallet, maintaining multiple wallets, and changing your password regularly.

Cryptocurrencies like Bitcoin and Ethereum became popular because they are decentralized currencies, with their value held and derived by their users. But this can influence the level of fluctuation seen in the last 24 hours.

If you are concerned about the risk of buying cryptocurrencies because of this, you may want to consider alternatives such as stablecoins. This is a cryptocurrency that is tied to an external reference, such as gold or a currency, that is perceived as more “stable”.

Stablecoins, as the same suggests, can offer a “best of both worlds” option for some investors by allowing you to add cryptocurrencies to your portfolio with the stable valuation of Fiat currencies. In fact, earlier this year, the big four ANZ banks minted the first stablecoin pegged to the Australian dollar; the A$DC.


  • Major cryptocurrencies have delivered high returns in the past
  • Can be a highly volatile investment
  • Consider prioritizing security, such as cold wallets
  • Lower risk investments such as stablecoins may be suitable for some investors

Time deposits are considered some of the safest forms of investment in Australia due to their simplicity and the Australian Government Deposit Guarantee.

Customers simply choose a term deposit lenderchoose the fixed term you prefer (typically 1 to 5 years) and store your savings for a guaranteed return at a fixed interest rate.

And unlike other investment options, the Financial Claims Scheme means that the Australian the government guarantees time deposits up to $250,000 if the provider went under.

While time deposits are considered much less risky than cryptocurrencies, the biggest downside to time deposits is the level of return you can earn. Again, going back to the notion that “the higher the risk, the higher the reward”, a time deposit with a very low interest rate may not give investors the returns they want.

With the average 3-year term deposit interest rate in RateCity’s database at 3.30%, even with a large deposit of $100,000, your return will be only $6,600 in interest.

But the cash rate has been forecast to rise several times over the next few years, with the big banks forecasting it could rise above 2.00% by 2024. And if providers continue to pass the hikes on to time deposits, this means that the rate on deposits can continue to grow.


  • Lower risk, lower reward
  • Interest rates are on the rise
  • Financial Claims Scheme turns time deposits into a safer investment

Which risk option is better for investors?

While CommBank’s new 2.25% special 18-month time deposit offer is competitive in the world of time deposits, it pales in comparison to the returns that major cryptocurrencies such as Bitcoin have brought to investors. in the past.

However, as the last 24 hours have shown, cryptocurrencies are highly volatile investment options and the level of return they can provide is not guaranteed, unlike a time deposit.

If you believe in the purpose of cryptocurrencies as a form of decentralized money, investing in something like Bitcoin can mean more to you than a return on investment. If you just want a guaranteed return on your investment, even if it’s small, it may be worth waiting for time deposit rates to go higher and putting away your savings.

Ultimately, the best investment option for your financial needs and goals will depend on your specific desires and risk appetite.