While the price of Bitcoin may have made strong gains in recent months, its risk/reward ratio may not be as appealing as other investment opportunities that are currently available.
The virtual currency has no fundamentals, while its limited size and lack of infrastructure may mean that it is unable to replace traditional currencies in the long run.
Moreover, there are a number of other investment opportunities which may be more appealing at the present time. They could be a better idea for anyone who is looking to invest £5k today.
Although the world economy may face a period of uncertainty at the present time, it continues to offer strong long-term growth potential. For example, the US economy is expected to grow by 2.6% in the current year, while China and India’s growth rates are forecast to be above 6%.
This suggests that FTSE 350 companies with exposure to the world’s major economies could offer investment appeal. Now could prove to be an opportune time to buy them, as risk-aversion among investors has increased in recent months as global trade war fears have built. This may mean that margins of safety are wider than they otherwise would be, which could improve an investor’s overall returns in the long run.
While the UK economy may offer a slower rate of growth than other major economies, there could prove to be investment opportunities for domestically-focused businesses. Among them are property stocks, many of them trading on low valuations at the moment.
In fact, a wide range of housebuilders and REITS currently have valuations significantly below their historic averages. Although there is scope for residential and commercial property prices to come under pressure in the near term, in many cases this risk has been factored in to company valuations across the sector.
Moreover, with the buy-to-let industry being less appealing than it was in the past due to tax changes, buying listed property stocks could be a better idea than having a buy-to-let portfolio.
With interest rates expected to remain low over the coming years, and share prices offering high yields in many cases, now could be the right time to buy dividend stocks.
The FTSE 100 currently yields over 4%, while many of its members offer significantly higher income returns and modest payout ratios. This could mean that their income returns are high and, crucially, sustainable over the long run.
In fact, income investors may be able to build a portfolio of mid and large-cap shares that has a combined yield in excess of 6% at the present time. This could produce strong cash flow that enables them to capitalise on the prospect of weak stock market performance over the near term.
Certainly, international shares, property companies and income stocks could experience a period of uncertainty in the coming months. However, through focusing on fundamentals, rather than investor sentiment, it may be possible to boost your financial prospects over the long run.
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Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
Motley Fool UK 2019