I don’t care about Bitcoin crash. I buy shares in the UK
Crypto crash confirms every suspicion I ever had about altcoins and I’d much rather buy UK stocks instead.
I find our stock market particularly attractive today, because FTSE 100 is full of bargains after a difficult year. I pick up my top targets when I have money to exchange.
Before this year’s crash, crypto advocates claimed that Bitcoin had somehow transformed into digital gold. It was a total delusion. Like almost all claims about crypto so far. No coin has a killer use to justify the hype. The only reason Bitcoin is attracting so much attention is that it made untold fortunes for early adopters. Newer investors are more likely to have lost money instead.
I expect UK stocks to beat Bitcoin
I still favored FTSE 100 stocks at the height of cryptomania. The names listed on the index are real companies, producing real goods and services, with real value in the real world, and employing real people. Call me old fashioned, but I’d choose real life over the virtual option any day.
That doesn’t mean the FTSE 100 will always make money. The last five years have been disappointing, and the index ended up mostly where it started, at around 7,350. However, it has shown its strength in this troubled year. While the United States S&P 500 is down 17.52% year to date and Nasdaq has crashed 29.80%, the FTSE 100 has fallen just 1.99%.
The overall return figure does not show the real attraction of investing in the index, which is to generate dividend income. This year the average return has been 4.1% over the FTSE 100 and I plow all the income back into my portfolio to buy more shares. That way, I take advantage of today’s low valuations, because my reinvested dividends fetch more shares.
The FTSE 100 has jumped 6.8% in the past month and some are arguing that the recovery is here. However, I expect more volatility. Britain is slipping into recession, with GDP falling 0.2% in the quarter to 30 September. Still, short-term stock price fluctuations don’t bother me, as I invest for a minimum of 15 to 20 years.
I don’t buy crypto
In marked contrast to UK stocks, crypto does not generate any income. That is a serious drawback given that I can currently get a return of 6.55% a year thanks to it Aviva7.34% from abrdn or 6.49% from Anglo American (and I’m not on the letter ‘B’ yet).
Of course, Bitcoin is not dead yet. I’m still holding on to the lone coin I own as demand may revive once investors get their mojo back. However, it has a difficult road ahead, as regulatory requirements increase.
While the share prices of individual companies can crash, as Bitcoin has, there are ways to reduce the risk. I carefully research each stock purchase, build a balanced portfolio covering different companies and sectors, and invest for the long, long term.
Another reason I prefer to buy stocks in the UK is that I don’t have to worry about my crypto wallet being stolen or my unregulated exchange not returning my money. They won’t make me a millionaire overnight, but neither will Bitcoin these days.
The post I don’t care about Bitcoin crash. I’m buying UK shares appeared first on The Motley Fool UK.
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Harvey Jones doesn’t have any of the stocks mentioned in this article, but he does have one bitcoin. The Motley Fool UK has no position in any of the stocks mentioned. Views on the companies mentioned in this article are those of the author and may therefore differ from the official recommendations we provide in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool, we believe that considering a diversity of insights does us better investors.
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