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Forget Bitcoin, buy-to-let and the Lottery! Here’s a time-tested way to a million

The price of Bitcoin has been on the slide since the middle of the summer and there could be a lot further for that move to run.

With the cryptocurrency trading close to $7,000 as I write, I can’t help thinking that’s a terribly high amount of money to pay for one virtual coin. But it was even higher, almost at $12,000 in July, and flirting with $20,000 at the end of 2017.

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A dearth of fundamentals

With a dearth of fundamentals, I reckon volatility with all cryptocurrencies is assured. So is Bitcoin’s unpredictability. And gambling on its speculation-driven price movements is very far from being a steady method for accumulating wealth – you are as likely to lose money as you are to make it with Bitcoin, I reckon.

Meanwhile, the long-term inclination of property prices is to rise, and people have been throwing capital at real estate for generations, waiting a long time, then harvesting their gains.

And I think that trend will continue. But I don’t think taking on a mortgage and piling into buying and letting a property is the guaranteed earner it once seemed to be. Property prices have become stretched when compared to the average wage, and I think there could be a lot of pressure in the years ahead for that gap to shrink again.

Maybe property prices will fall or stagnate while wages catch up. Either way, the process could be a big drag on buy-to-let profits in the years ahead. On top of that, the government has been changing the tax regime around buying a property to let it. The idea appears to be to discourage the practice.

Odds stacked against you

And if it proves difficult to make profitable the day-to-day business of renting out a property, your returns over the long haul could be disappointing, even if the value of real estate rises while you own your building.

You may be tempted to turn to The National Lottery because it looks like a tempting way of having a chance to make millions. But the odds of winning a meaningful amount of money on the lottery are so stacked against you that you are almost guaranteed not to.

The most likely outcome of a systematic approach to buying lottery tickets is that you will lose money over time. And the more tickets you buy, the more money it will likely cost you in the end, even if you reap a few small wins along the way.

A great overall performer

So I’d follow a time-tested way of aiming to make a million by putting regular money into shares and share-backed investments. Over the long haul, studies have shown that the stock market has outperformed all other major assets.

You could invest in individual company shares, but while you are gaining experience as an investor, I reckon investing in managed funds and low-cost index tracker funds can be effective. Why not start in 2020?

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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.