The Motley Fool

Forget Bitcoin! I’d invest in cheap UK shares to make a million after the stock market crash

Image source: Getty Images

When the equities sell-off reached its zenith in mid-March, many investors ditched the stock market for alternative assets such as Bitcoin. The virtual cryptocurrency can be traded like anything else on an exchange and recently, its price has risen sharply. But despite its appeals, I’d still invest in cheap UK shares to build serious wealth in the long run. Why? Well, let me explain.

The problem with Bitcoin

The price fluctuations of most cryptocurrencies make for a stomach-churning ride. In fact, it’s not rare for upswings and downswings of 20% or more to occur within the space of a few weeks. This makes it difficult to assign any significant role to Bitcoin in a portfolio when it comes to building wealth over the long term.

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...

What’s more, after 11 years in circulation, the cryptocurrency is still not widely accepted or recognised. For me, this raises concerns regarding the long-term viability of the virtual currency.

Perhaps the main problem with Bitcoin is that its value is determined by pure speculative demand. In other words, there is no measurement to determine what the intrinsic value of the asset might be. Don’t get me wrong, that’s no reason to cast Bitcoin aside, but as for using it to build long-term wealth, it’s a no go in my eyes.

To clarify, I’m not completely ruling out a small exposure to Bitcoin as part of a well-diversified investment portfolio. Rather, I’m warning against using Bitcoin as your core asset to build capital in the long run. The reason being is that I think there are much safer and superior options.

The strength of cheap UK shares

Despite the recent volatility in the stock market, investing in shares is a tried and tested way of building long-term wealth. Stick at it for long enough and you could even reach a six-figure portfolio.

I’d focus on identifying companies with strong market positions, stable earnings growth and solid business fundamentals. Think of companies such as Unilever, GlaxoSmithKline, and BAE Systems. Alternatively, you could hoover up the entire market with a UK tracker fund like the HSBC FTSE All Share Index.

Either way, after every major sell-off, the stock market has gone on to reach new highs. We’ve already seen this in the wake of the 2020 market crash with the American tech-heavy index, the NASDAQ 100. This underscores the importance of sticking at it for the long term. That way, you can ride out any temporary downswings and also enable the process of compounding returns to take effect, which is key to generating serious wealth.

The miracle of compound returns

To illustrate, if you invested £400 a month and managed to receive an annual return of 9% (similar to that of the FTSE 100’s historic annual return), you’d have an investment pot worth £1,085,200 after 35 years.

Ultimately, I reckon that building a well-diversified portfolio of quality UK shares is a superior and safer way to build serious capital over the long term. On top of this, many are trading on cheap valuations at the moment, so what are you waiting for?

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US $12.3 TRILLION out of thin air…

And if you click here, we’ll show you something that could be key to unlocking 5G’s full potential...

It’s just ONE innovation from a little-known US company that has quietly spent years preparing for this exact moment…

But you need to get in before the crowd catches onto this ‘sleeping giant’.

Click here to learn more.

Matthew Dumigan has no position in any of the shares mentioned. The Motley Fool UK owns shares of and has recommended GlaxoSmithKline and Unilever. 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.

Our 6 'Best Buys Now' Shares

The renowned analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply enter your email address below to discover how you can take advantage of this.

I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement.