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.

a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

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.

Motley Fool contributor Peter Stephens has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on How to invest

A young well-dressed couple at a luxury resort celebrate successful life choices.
How to invest

No savings at 50? I'd use Warren Buffett's methods to get rich and retire early

This simple strategy could be key to retiring rich even if starting late in life.

Read more »

Happy young couple saving money in piggy bank.
How to invest

How I'd build a winning portfolio by investing in top ASX shares now

Let's see what steps you could take to build a winning portfolio.

Read more »

Happy young couple doing road trip in tropical city.
How to invest

How to make $50,000 passive income a year from ASX shares

Here is how you can generate income each year without lifting a finger.

Read more »

Happy young woman saving money in a piggy bank.
How to invest

$20k invested in these ASX 200 shares 10 years ago is worth…

Let's see how these stocks have performed since back in 2014.

Read more »

A young well-dressed couple at a luxury resort celebrate successful life choices.
How to invest

How to build a million-dollar portfolio with ASX shares

These are the steps to take to build a seven-figure investment portfolio.

Read more »

Hands reaching high for a trophy with a sunset in the background.
How to invest

I'm taking Warren Buffett's advice for when ASX shares are at record highs

Would the Oracle of Omaha continue to buy shares when the market is at a record high?

Read more »

Beautiful young couple enjoying in shopping, symbolising passive income.
How to invest

If an investor puts $500 per month in an ASX shares portfolio, here's what they could have in 10 years

Harnessing the power of compounding can bring you great wealth...

Read more »

Man holding fifty Australian Dollar banknote in his hands, symbolising dividends, symbolising dividends.
How to invest

How much would I need in an ASX share portfolio to earn $500 a month?

Want a monthly income boost? Here's one way you could do it.

Read more »