Investing money in the best UK shares today could lead to impressive returns in the long run. Many British stocks are currently trading on low valuations after the market crash. Weak investor sentiment towards the stock market is holding back their performances.
As such, now could be the right time to build a diverse portfolio of FTSE 100 and FTSE 250 shares. They could offer less risk and more long-term return potential than Bitcoin that improves your prospects of retiring early.
Buying the best UK shares today
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The best UK shares to buy today are likely to be sound companies trading on valuations that don’t fully reflect their future prospects. Certainly, it’s possible to buy a wide range of cheap shares. However, if they have weak financial positions or disappointing outlooks, they may prove to be value traps.
Similarly, some of the most attractive businesses may now be overvalued following the stock market’s recent recovery.
As such, obtaining a combination of a low valuation and a high-quality business could lead to high returns. Many sectors, such as financial services, resources and consumer goods, appear to be unloved by investors. This may mean there are bargain shares within them. And they could go on to post strong recoveries as the world economy’s outlook improves.
Building a diverse portfolio of British stocks
Of course, the future for even the best UK shares is relatively uncertain at the present time. Risks such as further lockdown measures and Brexit may cause investor sentiment to come under pressure in the coming months.
Therefore, it’s important to build a diverse portfolio of British stocks that can reduce your reliance on a small number of businesses for returns. By spreading the risk across numerous sectors and regions, you may also benefit from differing growth outlooks as the global economic outlook evolves.
Over time, this may have a positive impact on your overall returns through providing your portfolio with access to a greater number of growth opportunities.
Bitcoin’s price prospects and risks
While cheap UK shares have clear long-term growth potential, some investors may be tempted to buy Bitcoin after its recent 100% price rise. However, the virtual currency has no fundamentals. This means that it’s not possible to determine if it’s cheap or expensive.
Furthermore, its limited size and lack of infrastructure may lead to its demand among investors waning over the long run.
Buying a range of undervalued, high-quality FTSE 100 and FTSE 250 stocks could be a much more prudent move. They offer less risk than Bitcoin, as well as the capacity to deliver high capital returns. And that can improve your financial outlook over the long run.
They may even help you to retire early as they delivering improving returns.
A Top Share with Enormous Growth Potential
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Here’s your chance to discover exactly what has got our Motley Fool UK analyst all fired up about this ‘pure-play’ online business (yes, despite the pandemic!).
Not only does this company enjoy a dominant market-leading position…
But its capital-light, highly scalable business model has previously helped it deliver consistently high sales, astounding near-70% margins, and rising shareholder returns … in fact, in 2019 it returned a whopping £150m+ to shareholders in dividends and buybacks!
And here’s the really exciting part…
While COVID-19 may have thrown the company a curveball, management have acted swiftly to ensure this business is as well placed as it can be to ride out the current period of uncertainty… in fact, our analyst believes it should come roaring back to life, just as soon as normal economic activity resumes.
That’s why we think now could be the perfect time for you to start building your own stake in this exceptional business – especially given the shares look to be trading on a fairly undemanding valuation for the year to March 2021.
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.