.The Bitcoin bounce in recent months has fuelled claims that it’ll replace gold as the world’s ultimate safe-haven asset. In particular, its fans reckon it’s the ultimate currency to hold as record-low interest rates and quantitative easing in many parts of the globe undermine the value of traditional paper currencies.
It could well turn out that Bitcoin becomes the most lucrative investment class of the 21st century. But, at the moment, I’m not taking a risk. In fact, Bitcoin’s recent tear higher has made me even more reluctant to buy in.
A Bitcoin bubble?
Bitcoin was changing hands for around $10,600 just three months ago. Since then, it’s more almost quadrupled in price and was last trading at record highs, north of $39,000. This smacks of a bubble, in my view. And Bitcoin has a history of collapsing, as it did when it hit its then-high watermark back in 2017.
Besides, I’m yet to be convinced that Bitcoin is actually, well, worth anything at all. Economist Nouriel Roubini recently stated that the cryptocurrency “doesn’t have any fundamental value” and that “the price of Bitcoin is totally manipulated by a bunch of people, by a bunch of whales.”
He went further by claiming that Bitcoin “is not even an asset,” comparing it to bonds, stocks, real estate and precious metals which provide income, have a use, and/or can deliver some capital gains.
The repeated failures of ETF issuers like VanEck to get a Bitcoin-backed investment vehicle off the ground hasn’t exactly boosted my faith in cryptocurrencies either.
Making millions with UK shares
There’s absolutely no reason to take a gamble with Bitcoin, in my opinion. Certainly when individuals can make better returns on their money elsewhere. I choose to invest my hard-earned cash in UK shares instead. This is because stock investing has long-term investors like me tending to enjoy an average yearly return of between 8% and 10%.
These proven rates of return mean that those committed to regular investment can make a fortune without having to rely on highly-speculative new assets like Bitcoin.
Let’s say you have £500 a month to invest in UK shares each month. After 30 years, you can expect to have made between £704,000 and £1.03m on an investment of just £180,000. You’d give yourself a great shot of becoming a market millionaire without taking a chance on a highly-volatile asset like Bitcoin. And you wouldn’t have had to leverage yourself up to the hilt to do it either.
In fact, buying UK shares after the 2020 stock market crash can significantly boost an investor’s chances of making a million. I can buy quality stocks that were oversold during the earlier panic. And then get rich as they rebound in value during the inevitable bull market.
This is how hundreds of Stocks and Shares ISA investors became millionaires following the global banking crisis. And, right now, there are scores and scores of great UK stocks like these to choose from.
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.