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When it comes to investing, there are various methods and tools available to help grow your wealth. One approach is trading contracts for difference (CFDs), which allows you to speculate on price movements without owning the actual asset. Another is holding the underlying asset itself, such as buying stocks or cryptocurrencies outright. While CFDs offer flexibility and leverage, holding the real asset provides several unique advantages that make it a preferred choice for many investors.

Here are some key benefits of owning the underlying asset, whether it’s stocks or cryptocurrencies, and why it might be the right strategy for you.

1. No Overnight or Weekend Charges

One of the most significant advantages of holding the underlying asset is that you avoid overnight or weekend charges. When trading CFDs, fees can accumulate over time for keeping your position open overnight, known as “swap fees” or “rollover fees.” These fees can eat into your profits, especially for long-term traders.

However, when you own the actual asset—whether it’s shares in a company or cryptocurrency—there are no such ongoing fees. You can hold your position for as long as you like without worrying about extra costs piling up. This makes it a more attractive option for long-term investors who prefer a buy-and-hold strategy. You maintain control of your assets without additional costs diminishing your returns.

2. Voting Rights for US Stocks

Another perk of owning the underlying asset, especially in stocks, is gaining shareholder privileges. When you hold actual shares in US companies, you are granted voting rights. This means you can participate in key decisions affecting the company, such as voting on board members, mergers, acquisitions, and other corporate matters.

This is a huge advantage for investors who want a more hands-on approach to their investments. By having a say in the company’s direction, you can influence decisions that may affect the value of your shares. These voting rights are not available when trading derivatives like CFDs, making owning the underlying stock a more empowering option for those interested in corporate governance.

3. Greater Control and Stability

Holding the underlying asset offers more control and security. Unlike trading with leverage, where even small price fluctuations can result in significant losses, owning the actual asset means you won’t be subject to margin calls or sudden liquidations. This reduces the stress of short-term market movements and allows for a more stable, long-term investment strategy.

For cryptocurrency investors, this is particularly important. While crypto prices can be volatile, holding the actual asset allows you to weather the storm without worrying about liquidation due to leveraged positions. You can keep your investment secure and wait for long-term gains without added risk from leverage.

4. Potential for Long-Term Gains

Owning the underlying asset is often more suitable for those looking for long-term growth. Whether you’re investing in a company that you believe in or a cryptocurrency you see as the future, holding the actual asset allows you to benefit from its appreciation over time. In contrast, trading with CFDs is typically more suitable for short-term speculation and carries the risk of losses from sudden price swings.

If you’re a long-term investor, you might prefer to hold stocks or cryptos because you believe in their value and potential growth. By holding the actual asset, you can ride out market volatility without worrying about closing positions or extra fees. Plus, any dividends or interest earned from stocks or other assets go directly to you, adding to your long-term profit potential.

Conclusion

While CFD trading has its benefits, such as leverage and the ability to trade on margin, there’s a clear case for holding the underlying asset. The lack of overnight charges, the voting rights you gain with US stocks, and the greater control over your investment make it a preferred choice for many long-term investors.

If you’re looking to build a stable, long-term portfolio, holding the underlying asset in stocks or cryptocurrencies might be the way to go. You can enjoy the freedom of no extra fees, engage with company decisions, and hold onto your investment with greater peace of mind.

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