Bitcoin is one of the most famous cryptocurrencies out there, and while its value has changed a lot this year, many consider it a viable investment and a solid way to make money. But before you invest any money in Bitcoin in the hopes that it will make you a millionaire, here is another lucrative – and less risky – investment that is worth considering.
Invest in the broad market
While there is With the potential to make big bucks with Bitcoin, there is also a safer way to build enough wealth to become a millionaire – invest in the broad stock market. Especially when charging S&P 500 Index funds could get you very, very rich without taking the risks associated with investing in cryptocurrencies.
Index funds are passively managed funds that aim to match the performance of the market indices to which they are linked. In the meantime it is S&P 500 is a market index made up of the 500 largest listed companies, measured by Market capitalization.
S&P 500 index funds are set up just like the S&P 500 itself. And if you invest in them, you could easily become a multiple millionaire.
Over the past 30 years, the S&P 500 index has returned an average of one year 10.7% return. That doesn’t mean the index has done well every year. In fact, it had several years of negative returns over that period.
But if we assume that the index can produce comparable returns over the next three decades, and you invest $ 500 yourself in S&P 500 index funds that have an average annual return of 10.7% over a 30-year period, you’ll squirm with $ 1.13 million. Make it $ 1,000 a month and you have $ 2.25 million to enjoy.
What Makes the S&P 500 a Safer Investment Than Bitcoin? It’s simple – it’s been around longer, and it has a longer history of recovering from downturns and rewarding investors for staying the course. Since Bitcoin has only been around for a little over a decade, we don’t know what kind of stamina it has.
Also, the future value of Bitcoin will largely depend on how much demand for it is, and in order for demand to stay strong, Bitcoin must become a widely accepted form of currency. But it’s too early to say whether that will happen or not. So if you’re looking for a way to build solid wealth without exposing yourself to a world of risk, S&P 500 index funds may be a much better choice.
To be clear, that doesn’t mean you shouldn’t invest any Money in bitcoin. But the stock market is still worth investing the majority of your wealth in, and S&P 500 index funds are a great way to invest in them for the long term.
This article represents the opinion of the author who may disagree with the “official” referral position of a premium advisory service from Motley Fool. We are colorful! Questioning an investment thesis – even one of our own – helps us all think critically about investing and make decisions that will help us get smarter, happier, and richer.