Headlines tell us that the Bitcoin price has been hitting a three-year high. November has been a particularly strong month for one of the most high profile cryptocurrencies. It’s suggested by some that it’s seen as a better hedge than gold against inflation and weakening currencies. And that’s why the price has been rising.
For me though the almost completely unregulated currency holds no appeal versus the returns I can get from investing in profitable income and growth UK shares. Best of all, it doesn’t take much money to start investing in shares. It’s perfectly possible to invest an amount like £150 a month in UK shares. This can grow substantially over time in a process known as compounding that can make you far wealthier, in my view, than Bitcoin ever could.
The appeal of shares over Bitcoin
The Financial Conduct Authority describes cyptoassets, which is what Bitcoin falls under, as “very high risk, speculative investments. If you invest in cryptoassets, you should be prepared to lose all your money.”
It does in fairness have a similar warning for penny shares. However, to make my million from modest monthly investments, I plan to stick mainly to the FTSE 350 and some of the larger AIM-listed shares.
For me these shares are far less risky than a cryptocurrency – especially now that share prices in some companies are trading on very cheap valuations.
How I’d invest £150 a month in UK shares to make a million
Specifically, if I was investing monthly and drip-feeding my investments I’d start with an investment fund. I’d do that through a platform like Hargreaves Lansdown so that I could minimise my costs and build up my holdings in a professionally managed investment. I’d also be comforted by the diversification that a fund can provide.
Once I’d done that I’d look to build up a pot of cash to invest £450 every three months into an individual share or an investment trust. The advantage again would be to minimise my trading costs and tax.
For the funds and any individual holdings, I’d want to identify shares that combine cheap valuations, dividend payments and share price growth potential. Given this year’s dividend cuts and the economic environment, shares that combine all these qualities are hard to find. And other investors will also be looking for them meaning they might not be cheap for long.
I think shares like Persimmon, Legal & General, and National Grid, all fit the bill of shares that combine these characteristics. They are shares I’ve actually held for a long time for this very reason. I’d happily add £150 a month to my stocks and shares ISA and drip feed buying more shares in these quality companies.
Over the coming years, I truly believe they will make any investor far better off than investing in Bitcoin will.