The Bitcoin price has trebled to its highest point in 2020. But buying the best shares now could be a better means of making a million.
Although Bitcoin has high reward potential, its risks are equally sizeable. Therefore, it may fail to live up to expectations among many bullish investors in the long run.
Buying the best shares now to make a million
Identifying the best shares to buy is clearly subjective. But investors who have purchased companies with solid balance sheets and competitive advantages while they trade at low prices have generally experienced impressive returns.
At the present time, there are a wide range of such businesses available to buy. That’s because indexes such as the FTSE 100 have failed to fully recover from the 2020 stock market crash.
For example, stocks such as HSBC, Diageo and GSK currently trade at prices that may not fully reflect their long-term growth potential. Therefore, they may be able to deliver returns ahead of the wider market in the coming years. Owning a diverse portfolio of such stocks may reduce overall risks. They may also allow an investor to capitalise on the world economy’s growth prospects.
Even if an investor only matches the stock market’s returns after buying the best shares, they could realistically make a million. For example, the FTSE 250 has recorded an 8.5% annual total return in the past 20 years. Assuming the same return on a £100,000 investment today would produce a £1m portfolio within 29 years.
A surging Bitcoin price
Of course, even the best shares may appear to lack appeal for some investors compared to the surging Bitcoin price. It has risen by as much as 200% over the past year, with sentiment improving dramatically. This may tempt some investors to avoid UK shares and head towards buy the virtual currency.
While such a situation could feasibly persist in the coming months, on a long-term basis Bitcoin may be a risky investment prospect. Its lack of fundamentals mean it’s impossible to value.
With regulatory risks likely to remain elevated over the coming years, investor sentiment towards the virtual currency could shift rapidly in a short space of time. The result of this may be a very volatile performance that lacks the relative consistency that a portfolio of UK shares provides.
As such, buying the best shares now could be a more reliable means of making a million. Their long track record and low prices suggests they may be in a strong position to turn an investment today into a large sum in the coming years.
Peter Stephens owns shares of Diageo, GlaxoSmithKline, and HSBC Holdings. The Motley Fool UK has recommended Diageo, GlaxoSmithKline, and HSBC Holdings. 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.