The past performance of UK shares suggests that a stock market recovery will take place over the coming years. Even though the stock market has rallied from its 2020 lows, it still trades significantly lower than its all-time highs. Therefore, there may be opportunities to buy high-quality shares at cheap prices.
Doing so could be a more profitable move than buying Bitcoin. The virtual currency’s value may have soared of late, but its high risks mean that a portfolio of UK stocks may offer a better chance to make a million.
Investing in a stock market recovery
As mentioned, a stock market recovery has always taken place following even the very worst declines. For example, the FTSE 100 halved as a result of the global financial crisis. It then went on to more than double in the years following the worst of the crisis to reach a new record high. As such, while economic and political instability may be high at the present time, taking a long-term view of a portfolio of shares can lead to impressive returns.
In fact, making a million from UK shares could be a realistic goal for many investors. The stock market has produced an annual total return in the high-single-digits in recent decades. Assuming a similar return in future would mean that a £100k investment, or £750 per month, would become worth in excess of £1m over a 30-year period.
However, with shares such as GSK, Barclays and British American Tobacco trading at valuations that are significantly below their long-term averages, there could be scope to beat the stock market’s long-term returns. Cheap shares in high-quality companies have historically offered impressive returns, since they allow an investor to capitalise on a stock market recovery following a market crash.
A risky outlook for the Bitcoin price
While a stock market recovery could lead to a portfolio valued in excess of a million, the prospects for the Bitcoin price continue to be relatively uncertain. The virtual currency may have made strong gains in recent months, but it comes with significant risks that may derail its performance over the long run.
For example, it has no fundamentals. This means it is impossible to determine its value. Furthermore, regulatory risks and its limited size may mean that it ultimately fails to replace traditional currencies. This may disappoint many of the cryptocurrency’s investors and lead to a fall in its price – especially after such a strong showing from the virtual currency.
As such, buying a diverse range of UK shares ahead of a likely stock market recovery could be a better idea than purchasing Bitcoin. Their low prices and track records of encouraging performance may mean they catalyse a portfolio so that it eventually becomes worth in excess of £1m.