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 business person holds a big balloon in front of their face.
How to invest

I'm fine with a stock market crash. You might be too

This article might leave you longing for a ride to the downside.

Read more »

Humorous child with homemade money-making machine.
How to invest

How I'd fill an empty ASX share portfolio to build a $500 monthly passive income machine

Building an ASX passive income portfolio simpler than you may think.

Read more »

A smiling woman with a handful of $100 notes, indicating strong dividend payments
How to invest

How to realistically turn a $7,000 ASX share portfolio into $75,000 by 2030

The Australian share market is a great place to grow your wealth. Over the years, countless Aussies have constructed ASX…

Read more »

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

4 steps to becoming rich with ASX stocks

These are the steps I would take to grow my wealth materially.

Read more »

Person with a handful of Australian dollar notes, symbolising dividends.
Investing Strategies

Want cash like Warren? How to stack paper without ditching ASX shares

Life is about trade offs.

Read more »

five people in colourful blow up tubes in a resort style pool gather and smile in a relaxed holiday picture.
Dividend Investing

5 simple steps to earning $500 in monthly ASX passive income

Almost any investor can build a $500 monthly passive income from ASX dividend shares.

Read more »

A businesswoman on the phone is shocked as she looks at her watch, she's running out of time.
How to invest

How timing the market can cost you big dollars

And one simple way ASX investors can avoid the urge...

Read more »

Legendary share market investing expert and owner of Berkshire Hathaway Warren Buffett
How to invest

5 easy ways to invest like Warren Buffett with ASX shares

Here’s how we can imitate Warren Buffett with ASX shares.

Read more »