Forget gold! I’d buy UK shares to try and become a millionaire

Gold continues to rocket, but this Fool would still prefer to buy UK shares with an eventual goal of a million pounds or more.

| More on:
British Isles on nautical map

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Invest in gold? Great for some, but not for me. UK shares look far more attractive, especially to chase a big target like a million pound net worth. 

That might be controversial as the gold price breaks record highs, now trading for nearly £1,800 per ounce.  

But, as I’ll show in a second, sensible investing in UK shares can reach the million-pound mark using nearly half the cash it might take with gold. 

Piling in

Is it worth investing in gold at all? Well, the yellow metal has a decent track record. 

Some don’t favour gold as an investment because it’s not an income-producing asset. Gold doesn’t do anything. It just sits there. 

And yet between 1978 and 2024, gold offered yearly returns of 7.98%. Demand has risen, and so has the price.

An 8% return over so many years has million-making potential. No wonder people are piling into it at the moment.

How about UK shares? Can putting my money with the best of British companies help me hit a million pounds? 

Well yes. In fact, the track record of UK shares trounces that of gold.

Let’s sidestep the FTSE 100 and its global tobacco, oil and mining behemoths. 

With 80% of revenues coming from abroad, they stretch the definition of being UK companies. 

The FTSE 250, the smaller index of the 101st to 350th eligible companies, is a much better proxy for domestic firms. 

The FTSE 250 hosts familiar British names like Greggs, J D Wetherspoon (LSE: JDW), ITV and Dr Martens. Those sound like UK shares to me. 

Income-producing

J D Wetherspoon has grown to one of the bigger companies on the index and the shares made their way into my own portfolio.

Its founder Sir Tim Martin remains in a hands-on role. 

Founder-led companies tend to focus less on short-term profit squeezing and more on building a lasting business to the benefit of customers. 

Wetherspoons also has a strong competitive advantage – or a moat – in its cheap pricing. Drinkers struggle to find pubs selling drinks so cheap. 

And Wetherspoons shares are income-producing assets. That means the same shares should be worth more over time. 

Wetherspoons shares bought in the 1990s have rocketed to 10 times their earlier value!

Like any shares, there are risks here too, of course. Supply costs are up and a cost-of-living crisis has led to thinner margins for the pub group. 

The million mark

But for a lofty goal of a million pounds sitting in my bank account, UK shares like J D Wetherspoon could get me there more cheaply than stacking up gold.

How so? Well, using gold’s historical 8% return then £705 a month over 30 years makes me a millionaire. 

Using the FTSE 250’s historical 11% return (which isn’t guaranteed) then £398 a month for 30 years reaches the £1m mark. 

Squirrelling away that much cash is no easy task, but even a fraction of these amounts could go a long way with sensible investing in shares. Both assets can be lucrative, but I’d always choose the stock market.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

John Fieldsend has positions in J D Wetherspoon Plc. The Motley Fool UK has recommended Greggs Plc and ITV. 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.

More on Investing Articles

Young Black man sat in front of laptop while wearing headphones
Investing Articles

Investing just £10 a day in UK stocks could bag me a passive income stream of £267 a week!

This Fool explains how investing in UK stocks rather than buying a couple of takeaway coffees a day could help…

Read more »

Investing Articles

A cheap stock to consider buying as the FTSE 100 hits all-time highs

Roland Head explains why the FTSE 100 probably isn’t expensive and highlights a cheap dividend share to consider buying today.

Read more »

Investing Articles

If I were retiring tomorrow, I’d snap up these 3 passive income stocks!

Our writer was recently asked which passive income stocks she’d be happy to buy if she were to retire tomorrow.…

Read more »

Investing Articles

As the FTSE 100 hits an all-time high, are the days of cheap shares coming to an end?

The signs suggest that confidence and optimism are finally getting the FTSE 100 back on track, as the index hits…

Read more »

Investing Articles

Which FTSE 100 stocks could benefit after the UK’s premier index reaches all-time highs?

As the FTSE 100 hit all-time highs yesterday, our writer details which stocks could be primed to climb upwards.

Read more »

Investing Articles

Down massively in 2024 so far, is there worse to come for Tesla stock?

Tesla stock has been been stuck in reverse gear. Will the latest earnings announcement see the share price continue to…

Read more »

Young Caucasian woman with pink her studying from her laptop screen
Dividend Shares

These 2 dividend stocks are getting way too cheap

Jon Smith looks at different financial metrics to prove that some dividend stocks are undervalued at the moment and could…

Read more »

Investing Articles

Is the JD Sports share price set to explode?

Christopher Ruane considers why the JD Sports share price has done little over the past five years, even though sales…

Read more »