Even though I am making a “crypto vs. stock investment comparison,” I would like to make it clear that in no way should cryptocurrencies substitute stocks in your portfolio. Instead, both stocks and cryptos should go hand-in-hand, with stocks taking up the majority of your portfolio and cryptos taking up to 5%, or 15% if you are young. That’s because the stock market has been time-tested for more than a century, while cryptos haven’t even been around for 15 years. There’s no underlying business with most cryptos either, and there’s no guarantee that the ROI will remain consistent.

With that clear, I will be comparing the top three stocks (U.S. only) with the top three cryptos (excluding stablecoins) by market capitalization.

Let’s see what would’ve happened if you had invested $1000 into the following stocks and their returns for various time periods:

Apple (AAPL)

Apple (NASDAQ:AAPL) is the world’s largest company, and it’s no surprise that the tech giant’s stock is often the first pick for both novice and experienced investors. Most equity funds also have AAPL as their largest holding since the company’s powerful brand allows for a lot of pricing power and its financials have consistently appreciated.

If you invested $1,000 into the company 10 years back, you’d have $12,501.62 right now. That’s a 1,150% increase, 28.7% annual for your annual rate of return (ARR).

If you invested $1,000 into AAPL stock five years ago, you’d have $3,960.5, a 296% increase and an ARR of 31.57%.

If you invested $1,000 into Apple a year ago, you’d have $1,108.18. That’s still up double digits at 10.8% despite all the macroeconomic headwinds.

You’d only be making a slight loss here in the low single digits if you invested during the peaks in December 2021 or March 2022.

Microsoft (MSFT)

Microsoft (NASDAQ:MSFT) has been surging ahead recently as it is contesting all the other tech giants for market share in all tech-related segments. Indeed, it has seen success doing so as its Azure product slowly chips away at Amazon’s (NASDAQ:AMZN) AWS, while the company’s partnership with OpenAI has put Alphabet (NASDAQ:GOOG, GOOGL) into panic mode. Whatever way you put it, Microsoft is firing on all cylinders, and there’s tremendous potential for the company, especially as it spearheads the development of artificial intelligence.

A $1,000 investment into MSFT 10 years back would turn into $11,111.79 right now, a 1,011% return with an ARR of 27.15%.

If you did that five years back, that $1000 would now be $3,437.80, yielding a total 243.78% return, a 27.9% ARR.

If you did the same a year back, you’d have $1,134.64, yielding a 13.46% increase.

However, buying MSFT at its peak back in November 2021 would yield a 10% loss.

Alphabet (GOOG, GOOGL)

Alphabet is the third largest U.S. company by market cap, with a solid foothold in the tech industry, which makes it a prime candidate to be analyzed in the crypto vs. stock investment comparison. It owns two of the most visited websites worldwide — Google and YouTube — with advertising making up most of its revenue. The company has been trying to diversify but has been facing headwinds due to strong competition and a tough economic environment.

For starters, the advertising business has been weak in recent quarters due to businesses cutting back on marketing expenditure. Meanwhile, efforts to diversify also has been arduous, especially with two of the hottest segments in 2023. Google Cloud has lagged behind AWS and Azure while it is struggling to beat OpenAI’s GPT-4 with its Bard chatbot.

Still, I see a bright future ahead with Google as it has the tools necessary to catch up to its peers.

A $1000 investment into GOOGL stock 10 years back would be worth $5,081.45 right now. That’s a 408.15% return, an ARR of 17.6%, all of which are significantly lower than other tech peers.

If you did the same five years ago, you’d have $2,050.81. A 105.08% total increase, with an ARR of 15.39%.

Surprisingly, investing $1,000 a year back would only leave you with $931.09, a 6.9% loss. That underperforms not only its tech peers, but the broader market as a whole.

Even worse, buying at its peak in November 2021 would only leave you with $723.65, a 27.64% loss.

That said, I believe Alphabet offers a lot of value right now at its current trough. I expect it to outperform the market when the company’s growth trajectory becomes clearer to investors.

Now let’s look into the top three cryptos, excluding stablecoins.

Bitcoin (BTC)

As we continue our crypto vs. stock investment comparison, we’d be remiss not to begin the crypto evaluation with Bitcoin (BTC-USD). This is the stalwart of the crypto market and among the handful of cryptos that I’d truly consider to be safe investments. It may not be flashy or have lots of Web 3.0 utility, but the blockchain does the job, and it is increasingly becoming a widely-accepted payment method, especially as layer-2 solutions become more popular.

The primary driver of the cryptocurrency’s value is its tokenomics. Bitcoin’s four-year halving cycle will continue to reduce its supply while BTC’s popularity keeps demand high. That has caused the price to increase exponentially so far.

Accordingly, a $1,000 investment 10 years back into this crypto would turn into $245,167.70 today. That’s an eye-watering 24,416.77% gain, with an ARR of 2,439%.

If you did that five years back, you’d have $2,977.50. A 197.75% gain, with an ARR of 39.3%.

However, a $1,000 investment into BC last year would return an 8.24% loss, leaving you with just $917.

If you bought Bitcoin at its peak, you’d be left with just $428.

Ethereum (ETH)

Ethereum (ETH-USD) is arguably the best cryptocurrency to buy if you’re looking to balance risk and reward. The Ethereum blockchain is packed with utility and leads development in the Web 3.0 sector. This blockchain contains many of the top crypto metaverse projects and is the single-biggest ecosystem for smart contract-based tokens, including non-fungible tokens (NFTs). There are also regular upgrades to the blockchain to improve its scalability and speed.

Regardless, it is a relatively new project, at least when compared to BTC. The price data for Ethereum only goes back to late 2015. With that in mind, I’ll only be looking at the 5-year, 1-year, and peak-to-trough returns/losses.

A $1,000 investment into Ethereum five years back would yield a 146.82% gain, taking your capital to $2,468.20. That’s a 29% ARR.

If you did that a year ago, you’d make a 17.3% loss, leaving you with $827.

Betting $1,000 during ETH’s peak would incur a 60.4% loss, leaving you with $396.

Binance Coin (BNB)

Binance Coin (BNB-USD) is the third-largest cryptocurrency by market cap if you exclude stablecoins. It is the native currency of the Binance ecosystem and the Binance exchange, the largest worldwide. The exchange has proven to be quite strong in the face of the FTX collapse and the subsequent mass withdrawals.

The price history of the crypto only goes back to July 2017, at its launch, and I consider it to be riskier than its decentralized peers who aren’t subject to the risks that centralized exchanges face.

Still, a $1,000 investment five years ago would turn into $21,364.10 today, with a 2,036.41% return. That’s an ARR of 409%.

Surprisingly, you’d still be up 4.4% if you invested the same amount a year ago, turning it into $1,044.

But if you bought at the peak in November 2021, you’d be left with $484, with a 51.6% loss

Conclusion

In summation, in the crypto vs stock investment comparison, cryptocurrencies have indeed outperformed stocks in the very long run due to their smaller market capitalizations. However, as the crypto industry has grown to be worth hundreds of billions, we’re seeing that sort of growth fade away. Starting with a five-year timeframe, the top stocks have yielded similar returns with significantly less downside risk. The only exception here is Binance, which has likely exhausted its growth potential for the near term with a market cap of $49 billion.

With that in mind, putting a small portion of your portfolio into a mix of big and small crypto projects could pay off greatly. But I don’t expect any of the top cryptos to outperform stocks in the long run, at least not by a considerable margin. The “past performance is no guarantee of future results” quote fits perfectly here.

On the date of publication, Omor Ibne Ehsan did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.