Why I Did Not Invest in Cryptocurrency

Just as human greed is boundless, stories about making money are also a topic everyone loves.

I am the same.

I suppose there are many people who wish to make money as easily and effortlessly as possible. It is somewhat understandable why there are so many scammers targeting them.

Many people understand that stock investing can be profitable, but they are too afraid to take the first step. For some reason, it is often those very people who come to me for advice, saying they want to try cryptocurrency because it seems like they could make money.

What is this person talking about?

That is my honest impression. I treat them coldly and cut the conversation short.

Personally, I have high expectations for the future of blockchain and the future of cryptocurrency. I believe that as safety, stability, and public awareness increase, cryptocurrency will gain a significant market.

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Mako-san, why don't you invest in cryptocurrency?

My answer is because it is subject to comprehensive taxation. The reason I focus on stock investing is because it is subject to separate taxation.

Thinking in terms of taxes, this is my answer. Whether the difference in tax methods is that important depends on an individual's income. Income tax increases as a progressive tax based on taxable salary income. Comprehensive taxation is progressive taxation.

Separate taxation is called so because it is taxed separately from salary income. The tax on stock investment profits is 20.315%.

When I was a company employee, the progressive tax rate was higher than the separate tax rate. Since I wanted to maximize the amount of money I kept as take-home pay, I was conscious of wanting to earn money through separate taxation, centered on stock investments.

Income tax and resident tax must be paid as a duty of the citizens. I will explain with specific figures.

Profit earned from stock investment is 1,000,000 yen
Profit earned from cryptocurrency is 1,000,000 yen

Even with the same 1,000,000 yen, the tax paid under the separate taxation for stock investments is 20%, which is 200,000 yen, so 800,000 yen remains in hand.

On the other hand, since cryptocurrency is subject to comprehensive taxation, it is taxed at 50%, so only 500,000 yen remains in hand.

Whether one considers this a large or small difference is up to the individual.

In the first place, cryptocurrency is an area I am not comfortable with because it is speculative and has high volatility.

In addition to that, because it is subject to a high tax rate under comprehensive taxation, I never had any intention of doing it.

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However, since I retired this year and my salary income has become zero, I started thinking that I might consider cryptocurrency as an investment target.

In conclusion, I have decided not to invest in cryptocurrency for now. I also do not invest in real estate, and the common thread between these two is that I cannot feel any emotional attachment to them.

You might wonder if emotional attachment is necessary for making money. For me, if I don't have that attachment, my actions become sluggish, so I view it as one essential element.

There is also the background of my insufficient knowledge. Since knowledge is something that is acquired as experience while taking action, I do not consider having little knowledge or experience to be a major factor.

Rather than thinking about wanting to make money as an investment target, the joy of stock investment lies in enjoying the process itself and hoping for the company's growth together. It is an emotional attachment to wanting to have expectations for the future.

As an activity as a social investor, that behavioral pattern also matches.

If I separate the times when I enjoy it as a money game and the times when I act from the position of an investor, it might not be a big problem.

I have written down my thoughts as a social investor here.