Ignore Bitcoin. Forget the Cash ISA. These are not the best ways to build long-term wealth for your retirement. I believe that building a balanced portfolio of cheap FTSE 100 shares is much better. Especially if you buy at moments like these, when FTSE 100 shares are available at relatively low valuations.
Investing for retirement is a long-term job. It should take most of your working life. That means 40 years or more. Over such a term, today’s stock market volatility will look like a blip. In fact, you can make it work in your favour.
The way to do that is to buy cheap FTSE 100 shares, with the aim of holding for the long term. Thanks to the stock market crash, you can pick up top companies at bargain prices, and simply wait for them to recover.
Markets will recover, history shows they always do. They will do it again, despite the unprecedented pandemic. It may take time, but share prices will pick up in the longer run.
I’d buy cheap FTSE 100 shares today
I wish I could be so confident about crypto-currency Bitcoin. Frankly, I’ve no idea how that is going to perform. Up one week, down the next, with little rhyme or reason. Right now, it stands at around $9,200. If it tops $10,000, as it may at some point, it will trigger another flurry of excitement.
That will bring out all the self-proclaimed experts claiming Bitcoin is heading for $100,000, or that magical one million dollars. More people will get sucked in, for fear of missing out. Yet Bitcoin still has next-to-no practical uses. It is merely a speculative tool. I do hold one Bitcoin, bought when it was much cheaper. Nowadays, I’d rather buy cheap FTSE 100 shares than costly cryptos.
Cash is a disaster zone, quite frankly. Right now, the average easy-access Cash ISA pays just 0.45%, according to Moneyfacts. With the Bank of England set to keep interest rates low for years, that is not going to improve. It might fall further, if base rates go negative.
I’d shun Bitcoin and the Cash ISA
While everybody needs a pot of easy-access cash to cover three to six months of spending in an emergency, you don’t want more than that sitting in the bank earning lousy interest.
That is why your long-term wealth should go into the stock market. Now is a big opportunity to buy cheap FTSE 100 shares, before they recover. If markets fall further, as they may, do not panic. That is an opportunity to load up your portfolio at an even cheaper price. Invest every month, if you can.
Then leave your money in the market for the long term, and reinvest all of your dividends for growth. This strategy makes more sense than gambling on Bitcoin, or letting your money die a slow death in a Cash ISA. I reckon that buying cheap FTSE 100 shares today is a much better way to get rich and retire early.
Markets around the world are reeling from the coronavirus pandemic…
And with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.
But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be daunting prospect during such unprecedented times.
Fortunately, The Motley Fool is here to help: our UK Chief Investment Officer and his analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global lock-down…
You see, here at The Motley Fool we don’t believe “over-trading” is the right path to financial freedom in retirement; instead, we advocate buying and holding (for AT LEAST three to five years) 15 or more quality companies, with shareholder-focused management teams at the helm.
That’s why we’re sharing the names of all five of these companies in a special investing report that you can download today for FREE. If you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio, and that you can consider building a position in all five right away.
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.