There was a fleeting moment when I thought I might make a million from Bitcoin. I held a handful of coins, and was trading fellow alt-coins ethereum and XRP by Ripple. It was December 2017, and cryptos were riding high.
Then reality struck. My dreams of becoming a Bitcoin millionaire were just that, dreams. Pretty ridiculous dreams, too.
Still, I’m not alone. Plenty of Britons continue to dream of making a million from Bitcoin. Hope springs eternal, and all that. One in 20 in the UK has bought cryptocurrencies, according to new figures from the Financial Conduct Authority. Of these, almost one in 10 used borrowed money. That is an incredibly reckless and dangerous thing to do, and could cost you dear. Please don’t do it.
This is no way to make a million
I wouldn’t buy Bitcoin at today’s price. In fact, I wouldn’t buy it at any price. This is a purely speculative tool, only for short-term traders or as I call them, gamblers. With Bitcoin trading at around $9,250 you would have to buy an awful lot to stand a chance of making big money. Given its massive volatility, you could lose a small fortune trying.
Who doesn’t dream of becoming a millionaire? Bitcoin is not the way to do it, though. Instead, I would recommend you build a balanced portfolio of FTSE 100 shares, using your Stocks and Shares ISA allowance for tax-free returns.
You really can make a million from top UK shares and you do not have to be a brilliant stock picker or speculative genius to do it. All you have to do is give up all thoughts of getting rich quick, and aim to get rich slowly instead.
If you start early enough, you really make that million by investing £500 a month. If you started at age 25 and made an average total return of 6.5% a year after charges, by age 65 you would have £1.12m. To achieve this, you have to reinvest all your dividends for growth.
I’d get rich and retire early on FTSE 100 shares
Remember, if this money is held in a Stocks and Shares ISA, all your returns are free of income tax and capital gains tax for life.
Naturally, if you are older, you will struggle to make a million by the time you turn 65. If you invest £500 a month from age 35, by age 65 you will have £551,935. That is still a lot of money, but half the sum you would have if you started 10 years earlier. Your early contributions are the most valuable, because they have longer to compound.
Late starters, do not despair. Investing something is always better than doing nothing. If you start investing £500 a month at age 45, for example, you also have £233,956 by 65, assuming the above growth rates. You may not have made a million, but your retirement will be a lot more comfortable.
So don’t waste time messing around with Bitcoin. There’s a much safer way to get rich and retire early.