The Motley Fool

Forget The National Lottery and Bitcoin! I’d invest using a time-tested way to get rich

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Lady researching stocks
Image source: Getty Images.

According to The National Lottery website, there’s a just over one in 45 million chance of getting six numbers correct and winning the Lotto jackpot. In other words, when I buy a ticket and choose my numbers, my chance of winning a life-changing sum of money is vanishingly small.

Meanwhile, in February 2011, the price of one Bitcoin stood near 75p. Today, almost 10 years later, the price is just above £14,250. So, if I’d invested £1,000 in Bitcoin 10 years ago, the face value of my hoard would be an eye-popping £19m or so now. However, selling would probably be quite tricky and would attract transaction costs and taxes.

5 Stocks For Trying To Build Wealth After 50

Markets around the world are reeling from the coronavirus pandemic… and with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times.

Fortunately, The Motley Fool UK analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global upheaval…

We’re sharing the names in a special FREE investing report that you can download today. And if you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio.

Click here to claim your free copy now!

How I’d invest to get rich

I didn’t put £1,000 into Bitcoin in 2011 because at the time it looked like a risky option to me. But what about investing now? To get a similar return from a £1,000 investment over the next 10 years, Bitcoin would have to rise to a price of around £270m per coin. And I think that looks unlikely.

Although several people claim to be Bitcoin millionaires, I wouldn’t rely on Bitcoin to make me wealthy now. And I don’t fancy my chances of winning the National Lottery. Instead, I’m using a time-tested way to get rich by investing in shares and share-backed investments such as trackers and managed funds. And I only need to look at the 1,000 or so ISA millionaires in the UK to see what’s possible.

I reckon investing within a tax-efficient wrapper such as a Stocks and Shares ISA is a good idea. Back in 2003, Lord John Lee emerged publicly as the UK’s first known ISA millionaire. By investing money into ISAs and the Personal Equity Plans that existed before ISAs, he contributed around £150,000 over the years. But now his investment pot is worth “several million”.

Compounding steady gains

He achieved those gains by researching and buying shares in generally smaller companies. Then he stuck with those holdings, allowing the underlying businesses to grow. And over the years he re-invested his returns to compound his gains. The process of compounding gains from long-term share investments drove his portfolio from a few thousand into millions. For most successful investors, I reckon compounding gains is the secret of their success.

Indeed, Lord Lee didn’t have to gamble with impossible odds by betting on the Lottery. And he didn’t have to flirt with risky vehicles such as Bitcoin. Instead, he rolled up his sleeves, worked hard at his investment strategy and made a long series of incremental gains over a lengthy period of time.

When I look at the record of any well-known successful investor, the story is often similar. I’m thinking of people such as Warren Buffett, Peter Lynch, Nick Train and many others. And that’s why I’m forgetting about The National Lottery and Bitcoin, and concentrating on executing my investments in shares.

“This Stock Could Be Like Buying Amazon in 1997”

I'm sure you'll agree that's quite the statement from Motley Fool Co-Founder Tom Gardner.

But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.

What's more, we firmly believe there's still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.

And right now, we're giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool.

Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge!

Kevin Godbold has no position in any share mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Our 6 'Best Buys Now' Shares

Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply click below to discover how you can take advantage of this.