Bitcoin’s been back on the charge in recent days. Its rapid climb has been built on strong safe-haven buying and a weakening US dollar, the world’s foremost cryptocurrency rocketing more than 17% in the past week.
Bitcoin struck 12-month peaks above $11,300 earlier this week and could be poised for more meaty gains as investor tension grows. Should you buy into Bitcoin today, though? Or would you be better off investing in UK shares?
My view is clear. And I think I speak for the majority of experts here at The Motley Fool too. Investing in Bitcoin is a massive gamble and could end up costing investors their shirt. Sure, many people have ended up making millions from the virtual currency over the past decade. But severe price volatility has also seen many others rack up substantial losses.
Bitcoin could well rise more over the coming days and weeks on flight-to-safety interest, as I say. Exactly what price it’ll be changing hands at five years from now is quite another matter, however. Over the past 12 months, Bitcoin’s traded as high as $12,060 and as low as $4,927. When an asset class is as volatile as this — and with prices often jumping around with no clear rhyme or reason, either — it’s impossible to make a sound investment decision.
I’m reminded of famous comments by Warren Buffett which, whilst directed towards investing in stocks, can be equally applied to Bitcoin. He said that you don’t buy or sell businesses based on today’s headlines. You buy stocks based on an assumption that they will be in good shape several years from now. With Bitcoin continuing to hit regulatory hurdles I’m not sure the asset class will even still be around at the end of the 2020s.
UK shares: better than Bitcoin?
This is why I’d much rather buy UK shares than invest in Bitcoin. Share markets have been around for centuries and have a much stronger track record of making people rich. Sure, they’re not immune to extreme volatility themselves, as the 2020 stock market crash illustrates. But they remain a much clearer, more robust and less risky way for investors to put their money to work than Bitcoin.
Studies show that with a sound investment strategy the modern long-term investor can make an average annual return of up to 10% on their money. Based on this calculation, someone aged 25 who invests £250 a month in UK shares could find themselves sitting on an enormous £1.1m by the time they retire.
But you don’t have to start investing in early adulthood to get rich from UK shares. Even if you have no savings at 40 you can still make a whopping £493,000 to retire on at age 65 based on that 10% rate.
So forget about gambling your money with Bitcoin: trying to get rich with shares is a much better idea. And there’s a wealth of cut-price quality stocks to choose from following the stock market crash.
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Royston Wild 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.