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Forget Bitcoin and buy-to-let! I’d buy cheap FTSE 100 shares in an ISA today

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If you want to buy cheap FTSE 100 shares, you’re spoilt for choice. The index is full of them following the stock market crash. Better still, if you buy inside your £20k Stocks and Shares ISA allowance, you can take all your income and growth free of tax.

You can’t say the same for rival investments such as Bitcoin or buy-to-let. Cryptocurrencies don’t pay any dividends, but you pay capital gains tax on any growth you generate. HM Revenue & Customs has hammered buy-to-let investors, and I’d seriously question the merits of taking on so much effort for so little reward.

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Today looks a particularly good time to invest in cheap FTSE 100 shares, because the market is still down by around a quarter from its January highs. Share prices have picked up in recent weeks, but there’s still plenty of value to be had.

Cheap FTSE 100 shares galore

Investors who bought when the index briefly dipped below 5,000 (as I advised and did myself) have enjoyed a 17% increase since then. Once again, this shows the merits of cranking up your courage and buying shares in the middle of a crash. Markets eventually recover, as they always have done, but you’ll benefit from that low entry price for years.

We will see more volatility in the weeks ahead, but I still think now’s a good time to buy cheap FTSE 100 shares before prices climb even higher. 

Why am I so sure markets will recover? Because history shows they’ve pulled out of every single bear market in the past. What we don’t know is when it’ll happen. If you buy cheap FTSE 100 shares today, you’ll be ready whenever the recovery comes.

That’s a boast Bitcoin and other cryptos simply cannot make. Bitcoin has a short-term track record of random volatility, as investors have no idea where it’ll go next. I think that’ll continue, until somebody discovers a practical use for it. Those who claimed Bitcoin is a store of value were proven wrong by this year’s price plunge.

Load up your ISA today

It’s hard to gauge what’s happening to property prices, as the market’s in lockdown. However, I’m glad I’m not a buy-to-let landlord, negotiating with hard-pressed tenants over rent ‘holidays’. The entry costs are too high for me, given the stamp duty surcharge, while mortgage tax relief has been cut to the basic rate.

Buying FTSE 100 shares inside a Stocks and Shares ISA is so much easier, and tax efficient. That would be my preference today.

The stock market could fall again. That’s the nature of investing in shares. Over the longer run, it always recovers, to deliver superior returns to rival asset classes. I would back it over Bitcoin and buy-to-let at any time, but particularly now.

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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.

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