Forget the Bitcoin Price! Here’s How I’d Invest in Stocks to Make a Million

Buying and holding stocks could be a more profitable strategy than investing in Bitcoin.

New virtual money concept, Gold Bitcoins

Image source: Getty Images

The strong performance of Bitcoin in 2019 could cause some investors to consider its purchase. After all, it has risen by around 100% in the last 12 months.

However, Bitcoin continues to be a risky asset to hold. It could experience a volatile year in 2020, and may fail to live up to the expectations of some of its bullish holders.

By contrast, the stock market appears to offer excellent value for money at the present time. A buy-and-hold strategy has historically been a sound means of generating high returns, and could increase your chances of making a million.

Undervalued opportunities

While the global stock market has experienced a decade-long bull run, many shares continue to offer good value for money. This may be because investors have gradually priced in the risks facing global growth. For example, political uncertainty in the US and China, as well as the ongoing trade war between the two countries, may negatively impact on the operating environments of many global businesses in the medium term.

However, stock indexes such as the S&P 500 and the FTSE 100 have always recovered from periods of uncertainty to post higher highs. Therefore, recent weakness in share prices could present a buying opportunity for investors. They may be able to buy companies with solid balance sheets and impressive track records of growth at lower prices. This may lead to higher returns, as well as lower risks, since investors are buying stocks at a discount to their intrinsic value.

Buy-and-hold strategy

After a decade-long bull market, it may be tempting to take profit on some of your holdings. After all, no bull market has ever lasted in perpetuity, and a bear market is never too far away.

However, this may not be the most efficient use of your capital. It may be a better idea to remain invested in equities due to their relative appeal compared to other assets such as bonds and cash. They offer lower returns, and could fail to post positive real-terms returns in the coming years.

As such, adopting a long-term view of the stock market and holding the most attractive shares in your portfolio could be a shrewd move. It may enable compounding to impact on your overall returns, while providing the companies in which you hold shares the time they need to successfully implement their growth strategies.

Bitcoin price

The risks of buying Bitcoin continue to be relatively high. Its limited size and lack of infrastructure may hold back its performance, while regulatory change could cause uncertainty. As such, now may be the right time to pivot from the virtual currency to undervalued shares that are held over a period of many years. This strategy may not seem as exciting as holding the cryptocurrency, but it could increase your chances of making a million.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

More on Investing

grow money, wealth build
Investing

2 Stocks That Could Create Lasting Generational Wealth

The term "Coca-Cola Millionaire" exists for a reason.

Read more »

Dividend Stocks

3 No-Brainer Dividend Stocks to Buy Under $15

Today, we’re going to look at three dividend stocks that are set up for success.

Read more »

calculate and analyze stock
Energy Stocks

Here’s Why it’s Not Too Late to Buy Brookfield Renewable Stock

BEP (TSX:BEP.UN) stock shares surged on earnings, but part of it was due to even more growth on the way…

Read more »

Dice engraved with the words buy and sell
Dividend Stocks

Enbridge Stock: Buy, Sell, or Hold Today?

Enbridge now offers a 7.3% dividend yield.

Read more »

tsx today
Stock Market

TSX Today: What to Watch for in Stocks on Friday, May 17

TSX investors may remain cautious today ahead of the long Victoria Day weekend.

Read more »

TFSA and coins
Dividend Stocks

TFSA Investors: 2 Dividend Stocks I’d Buy and Hold Forever

TFSA investors can earn worry-free income through these top Canadian dividend stocks.

Read more »

question marks written reminders tickets
Investing

Is it Too Late to Buy goeasy Stock?

Although goeasy stock trades just off its 52-week high, here's why its still one of the best long-term growth stocks…

Read more »

green energy
Dividend Stocks

3 TSX Utility Stocks to Buy Hand Over Fist in May

Given their stable cash flows and healthy growth prospects, these three utility stocks are excellent buys right now.

Read more »