While Bitcoin is often viewed as being a worthwhile growth asset, the stock market could offer a number of sectors that are able to generate stronger returns in the long run.
Certainly, the blockchain technology on which the virtual currency is built could have an exciting future in a variety of applications. But with Bitcoin itself having a limited size, as well as appearing to be unpopular among lawmakers, its long-term prospects of replacing traditional currency may be limited.
By contrast, there are a number of sectors in the stock market that could generate high returns over the long run. By investing in them, it may be possible to beat Bitcoin, as well as the wider stock market, over future years.
Changing world
While it is impossible to accurately predict the future, technology is set to become an increasingly important part of people’s lives. Artificial intelligence is growing in prevalence and popularity, with improving technology having the potential to cut costs for a variety of companies in numerous sectors. This could range from replacing a number of different jobs, especially in the service industries, to offering greater personalisation across a variety of sectors, such as in retailing.
With a number of companies beginning to employ artificial intelligence to a greater extent, they may see their costs fall significantly in the long run. At the same time, a stable global economic outlook may mean that they continue to deliver improving top-line growth, which could produce significant share price growth for businesses that are dominant in their respective sectors. Investing in them could produce a high rate of return for investors.
Demographic changes
A growing and ageing world population could offer significant investment opportunities in a range of areas. It may mean that healthcare stocks see increased demand in the coming years, with longer life expectancies meaning that demand for healthcare increases.
Similarly, a larger world population may produce a tailwind for consumer goods companies, as well as food producers. These sectors have enjoyed strong growth in recent years, which may be set to continue.
Growing wealth
With emerging markets forecast to post strong growth in wages and wealth levels over the long run, companies which operate in countries such as China and India may benefit from a significant tailwinds over the coming years.
A wider range of products may become affordable for a larger number of people across the world economy, with premium brands in particular having the potential to see the size of their total addressable markets increase in future. Likewise, wealth planning and banking services may also enjoy improving trading conditions at a time when many of them continue to trade on low valuations.
Investment potential
While Bitcoin may appear to be an exciting investment opportunity, the reality is that its future seems to be somewhat challenging. By contrast, there are a wide range of growth areas on offer within the stock market for long-term investors. As such, buying shares, rather than buying Bitcoin, could prove to be a shrewd move. The stock market’s long and successful track record of growth suggests that it is the best home for risk capital at the present time.