Forget the Bitcoin price rise. I’d invest in UK shares to get rich and retire early – The Motley Fool UK
While many UK shares have experienced a hugely challenging period over recent months, the Bitcoin price has surged higher. It’s now trading around 100% higher than it was in March, which suggests investors are becoming more bullish about its future.
However, buying the virtual currency could be a risky move. Therefore, building a portfolio of undervalued British stocks may be a better idea. They could provide high returns that improve your retirement prospects.
Bitcoin price rise
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Although the Bitcoin price may have outperformed many UK shares in recent months, its future prospects could be somewhat challenging. For example, its lack of infrastructure may hold back its usage.
Similarly, the potential for regulatory change could inhibit its potential to eventually take over from traditional currencies. And, with there being many rival cryptocurrencies available, its popularity may come under pressure in the long run.
Moreover, it’s difficult to analyse whether now is the right time to invest in Bitcoin following its price rise. The virtual currency has no fundamentals from which investors can gauge whether it offers good value for money.
Its performance is solely based on investor sentiment, which could equally improve or decline over the long run. As such, buying it today is likely to be a risky strategy that may not be suited to building a retirement nest egg over the coming years.
Buying UK shares
By contrast, UK shares provide the opportunity to buy high-quality companies when they’re trading at cheap prices. Investors can conduct research into their industry outlook, financial position, and growth strategy in order to determine whether they have the potential to trade at higher prices.
And, with the stock market having a long track record of producing high single-digit gains on an annualised basis, it offers a more dependable means of building a portfolio versus Bitcoin.
Clearly, buying British stocks after the recent market crash could be a difficult process for any investor. After all, there’s the potential for a second downturn this year should risks such as coronavirus and Brexit remain high.
However, the past performance of the stock market suggests such periods are the ideal time to buy high-quality shares. They offer the potential to recover from low prices that can translate into high returns for investors.
Building a retirement portfolio
Of course, buying a diverse range of UK shares can further reduce overall risks. By having exposure to more companies that operate in different sectors, you reduce your dependency on a small number of companies and/or sectors through which to build a nest egg.
While Bitcoin may prove to be a more exciting investment, ultimately it lacks appeal relative to British stocks based on risk and reward opportunities. Therefore, while stock prices are low, now may be the right time to take advantage of the stock market’s long-term growth potential to improve your chances of retiring early.
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.