When it comes to making money from the world’s financial markets, you have no shortage of options these days. Forex, cryptocurrencies, stocks, funds, ETFs, commodities… These are just some of the ways you can potentially generate profits.
Some financial strategies are more likely to make you wealthy than others, however. If you’re serious about generating wealth, I say forget about cryptocurrencies and forex trading, and instead, put your money into a Stocks and Shares ISA.Â
Bitcoin and forex: don’t believe the hypeÂ
It’s easy to see why cryptocurrencies such as Bitcoin have caught the attention of many investors. Had you bought a decent amount of Bitcoin a decade ago, you’d probably be a millionaire by now. Yet looking ahead, I think it’s unlikely Bitcoin will generate the same returns for investors. The chances of Bitcoin being adopted as a proper currency look slim. Meanwhile, regulators are cracking down on cryptocurrencies in a big way. This means there is now more downside risk. If your goal is to build real wealth, I’d steer clear of Bitcoin.
I’d also steer clear of forex trading. Why? Simply because the majority of forex traders lose money. Just look at the stats. According to forex.com, 72% of retail investor accounts on its platform lose money. Meanwhile, on fxcm.com, it says 75% of retail investor accounts lose money. Of course, there are plenty of forex traders that do make good returns trading the world’s currency markets. However, becoming a top forex trader is not easy.
Stocks and Shares ISA: the easy way to build wealth
If you’re looking for a straightforward way to build wealth, I think you’re better off putting your money into a Stocks and Shares ISA. With this type of ISA, you can invest your money in a wide range of wealth-building assets. And any gains you make will be completely tax-free.
With a Stocks and Shares ISA, you have plenty of investment options.
One option is to invest in a global equity fund such as Fundsmith Equity. This is a top-performing investment fund that owns stocks such as Microsoft, PayPal, and Unilever. It has returned about 20% per year over the last five years.
Another option is to invest in an investment trust such as Scottish Mortgage Investment Trust. This is a tech-focused investment trust that owns stocks such as Amazon, Tesla and Netflix. This trust’s share price has risen about 230% over the last five years.
You also have the option to invest in individual companies yourself. For example, you could buy shares in companies that you know such as Apple, Alphabet (Google), or JD Sports Fashion. All of these companies have delivered strong returns for investors in recent years.
Alternatively, you could invest in fast-growing smaller companies. Smaller companies are generally riskier than large companies, however, they tend to produce higher returns. For example, video game company Keywords Studios has turned a £2k investment into about £22k in just five years.
Invest £500 a month into a Stocks and Shares ISA and earn 10% per year on your money, and you’re looking at a one million pound investment portfolio in around 30 years. With a simple investment strategy, it’s very easy to build real wealth within a Stocks and Shares ISA.Â