While Bitcoin has become increasingly popular among individuals seeking to make a million from their investments, the FTSE 100 could offer a better chance of achieving that goal. Certainly, it’s trading only slightly higher than it was 20 years ago. But that could indicate it now offers good value for money.
Furthermore, there are a number of sectors that offer impressive growth outlooks over the long run. Buying those now instead of Bitcoin could prove to be a shrewd move when it comes to generating a seven-figure portfolio.
As mentioned, the last two decades have been somewhat lean when it comes to growth for the FTSE 100. Between 1984 and 1999, the index increased in value almost seven-fold. However, since the end of the 20th century, the FTSE 100 has been unable to post significant returns from a capital growth perspective.
There are a couple of key reasons for this. Firstly, the index was at the very peak of a major bull market back in 1999. The dot com bubble was in full swing, and this meant investor sentiment was arguably the most positive it had been in decades. Shares were essentially vastly overpriced back then, so a period of lacklustre growth was likely to follow.
Secondly, the FTSE 100 now appears to be undervalued. It has a dividend yield of over 4%, which is one of the highest levels it’s recorded outside of a bear market. During more difficult periods, the chances for dividend growth, and even for dividends to be paid, reduces. Now though, investors can obtain a high yield, while the future prospects for the world economy continue to be bright.
There are various sectors that could catalyse the FTSE 100 performance over the long run. Emerging markets continue to offer growth potential for a wide range of industries, including consumer goods and banking. Major developing economies such as China and India are growing at rapid rates and could help to lead the index higher as it’s dominated by companies with international exposure.
Similarly, the resources sector may yet have room for growth at a time when many of its incumbents are trading on low valuations. Likewise, healthcare stocks may be able to capitalise on an ageing world population, while also offering defensive characteristics. And, while the UK retail sector may seem to be experiencing a challenging period, recent results from major retailers have shown that with sound strategies they are able to post encouraging financial performances.
Through purchasing a range of large-cap shares, it may be possible to generate high returns in the long run. Doing so could be a better idea than buying Bitcoin, with the virtual currency having no fundamentals and it lacking real-world usage potential. As such, seeking to make a million from the FTSE 100 could be a better idea.
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Peter Stephens has no position in any of the shares 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.