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Forget buy-to-let, Bitcoin and gold! Here’s how I’m planning to make a million

Some investments have an almost irrational hold on people. Especially those that promise to deliver great riches.

Dreams of avarice

Bitcoin is definitely one of them. Its crazy price growth has sucked in the get-rich-quick crowd, but at today’s price of nearly $12,000 you are taking an unwarranted risk buying it. Royston Wild would buy this stock instead.

Buy-to-let was another crowdpleaser, delivering 20 years of capital growth and income until it succumbed to the Treasury’s tax attack. Rupert Hargreaves reckons the FTSE 250 should easily beat it now.

Others swear by gold, which has a 4,000-year history as a store of value. But since it doesn’t pay income, you are reliant on price growth to make money, and that can be highly volatile.

All three may have a place in a diversified investment portfolio, but the bulk of your money should still go into stocks and shares.

Crazy days

There have been times when investors have lost their heads over stock markets as well. I remember the bull market runs of the 1980s and 1990s, culminating in the pre-Millennium technology boom and subsequent bust in 2000. There was plenty of euphoria then.

There isn’t much today, which is odd, as the S&P 500, Dow and Nasdaq have just hit all-time highs after the longest bull run in US history. Investors remain sceptical, because they know this has been built on loose monetary policy and the underlying economy is decidedly shaky.

Doomsayers have been warning of a crash for years but it hasn’t happened, or rather, central bankers won’t let it happen. The Fed is looking to cut rates again, almost certainly this month and possibly by 0.5%, which should keep the bulls running for a little longer.

Where will the stock market go for the rest of the year? I have no idea. Nobody has. The thing is, it doesn’t really matter.

Think shares

If investing for retirement you will be putting money away for 30 or 40 years and history shows markets beat all-comers over such lengthy periods. If you stick with it, there is a good chance you could build a million pound Stocks and Shares ISA.

Shares appeal to me because they are grounded in the real economy, investing in real companies making real things that real people want to buy. Better still, the best companies reward investors with dividends and the FTSE 100 currently yields a generous 4.34% a year. If you reinvest those dividends back into your portfolio, you will steadily pick up more stock that pays more dividends, buys more stock, and so on in an endless virtuous circle.

Long-term plan

I’ve been investing via a personal pension and Stocks and Shares ISA for two decades now. If I match average life expectancy I can expect to live for another 30 years or so, and I expect to keep that money invested throughout that time, drawing income when I need it in my later years.

I hold a fraction of a Bitcoin and still dream of owning a buy-to-let property, except it seems too much hassle. I don’t hold any cash outside of my current account. For me, shares are my best shot at building a million pound pension.

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Harvey Jones 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.