Save $10,000 in student loans? Why buying these 3 cryptocurrencies is a no-brainer

President Biden said last week that the federal government would forgive some government-backed student loan debt. In order to take advantage of the $10,000 debt forgiveness, your annual income must be less than $125,000.

If you file taxes with a spouse, your collective income must be less than $250,000. Those who received a Pell Grant are eligible for a cancellation of up to $20,000 and must meet the same requirements. In addition to the debt cancellation, the Biden administration announced that the payment pause on all federal student loans will be extended until January 1, 2023.

If you are one of those former students who meet the requirements, you might be wondering what you should do with your extra savings. Should you invest in real estate, possibly buy more of your favorite stocks, or maybe even buy cryptocurrencies?

On average, the national real estate market is growing only 3.5% to 3.8% per year. Plus, with home prices near historic highs, that $10,000 is unfortunately not enough for a down payment in most real estate markets. Since its creation, the S&P500 has earned around 12% per year and has grown by around 65% since 2017. Nasdaq did almost twice as much over the same period, returning 137%.

But if you’re looking for investments with both long-term value and growth that could outperform real estate and stocks, here are three cryptocurrencies that fit that criteria: Bitcoin (BTC -5.90%), Ethereum (ETH -9.00%)and Polygon (MATIC -10.05%). Bitcoin has appreciated nearly 350% over the past five years. Ethereum is up just under 340%. And despite being only three years old, Polygon has grown over 25,000% since its inception.

The market leader

Bitcoin’s case is relatively simple and straightforward. Bitcoin is the most valuable cryptocurrency in the world and accounts for almost 40% of all the value of the entire cryptocurrency market capitalization. At one point, that number reached 90%. Many investors choose to own Bitcoin because of its proven track record. It also has unparalleled decentralization, security, and increasing scarcity. Moreover, since most other cryptocurrencies are correlated to the price of Bitcoin, investors tend to prefer investing in Bitcoin as it serves as a de facto market index for all cryptocurrencies.

The Dominant DeFi Blockchain

Ethereum’s place as the second most valuable cryptocurrency comes down to one key innovation: smart contracts. With smart contracts, developers can create applications such as decentralized exchanges like Uniswapnon-fungible tokens and even lending platforms like Aave and Curve. This class of alternatives to traditional finance constitutes an industry known as decentralized finance, or DeFi. Considering that more than half of the $60 billion in all of DeFi is on the Ethereum blockchain, an investment in the smart contract platform is a no-brainer.

Ethereum’s sidekick continues to grow

One of the downsides of Ethereum is that since its popularity skyrocketed, user traffic has clogged the network, making it slow and expensive. To remedy this, Polygon was created as a layer 2 sidechain to make Ethereum faster and cheaper to use. Polygon processes transactions separately from Ethereum using a more affordable and faster proof-of-stake consensus mechanism. Once completed, the transactions are then added to the Ethereum blockchain for final settlement.

Polygon’s popularity has come a long way since its inception in 2018. In July alone, disney chose Polygon to join its venture capital arm known as the Accelerator program. Disney will now dedicate time, money and resources to help Polygon achieve its vision as a blockchain that supports Web3 development. The ultimate goal is for a partnership to grow between Disney and Polygon as the media giant takes steps to enter the world of NFTs and blockchain technology.

Even though each of these cryptocurrencies has its own unique reasons to deserve a place in your portfolio, they are all blessed to be leaders in different sectors within crypto. So if you have leftover funds that were originally intended to pay off student loans, Bitcoin, Ethereum, and Polygon could generate returns that stocks or real estate can’t approach. Over the long term, these cryptocurrencies are positioned to continue to lead a booming asset class that continues to grow.

RJ Fulton has positions in Bitcoin and Ethereum. The Motley Fool holds and recommends Aave, Bitcoin, Curve DAO Token, Ethereum, Polygon, Uniswap Protocol Token, and Walt Disney. The Motley Fool recommends the Nasdaq and recommends the following options: Walt Disney January 2024 $145 long calls and Walt Disney January 2024 $155 short calls. The Motley Fool has a disclosure policy.

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