Bitcoin has come into its own in some respects this year. Since the beginning of the year, the value of the cryptocurrency has risen by around 50%. Over the same period, the UK’s leading stock index, the FTSE 100, has fallen in value by around a fifth. Some investors might be tempted to buy Bitcoin thanks to this performance. However, if you are looking to get rich and retire early, I believe FTSE 100 dividend stocks are the much better option.
The value of Bitcoin has rallied this year as investors have sought solace in it. Despite this performance, the cryptocurrency still has many fundamental weaknesses.
For example, unlike FTSE 100 dividend stocks, the asset does not generate any cash flow. This makes it difficult to value. It is only worth as much as investors are willing to pay for it. This has helped Bitcoin rise in value recently. But I think this is unlikely to last.
As such, if you want to retire early, it might be better to buy FTSE 100 dividend stocks instead.
FTSE 100 dividend stocks to retire early
After the recent stock market crash, there are many FTSE 100 dividend stocks that continue to look undervalued. I think it could be worth buying these assets while they trade at low levels, instead of Bitcoin. Especially as the value of the cryptocurrency has reached a 52-week high.
Research shows that the best time to buy assets is when they are trading at low levels. Doing so tends to produce better returns over the long run. With this in mind, FTSE 100 dividend stocks look more attractive than Bitcoin at current levels.
Another advantage these assets have over the cryptocurrency is income. Bitcoin does not produce an income, but dividend stocks do. The average dividend yield of companies in the FTSE 100 is around 3.8%. By comparison, most cryptocurrency platforms charge investors to use their offering.
FTSE 100 dividend stocks are also much more secure. This is critical if you want to use the income to retire early. Every online stockbroker has to be regulated by the Financial Conduct Authority and segregate client assets. Investors’ assets are also protected up to a certain level if the institution collapses.
Bitcoin platforms do not provide similar protections. In recent years there have been numerous Bitcoin thefts, which have left investors with nothing. Personally, I would not want to take this risk, losing a chunk of my hard-earned money to theft would significantly reduce my chances of being able to retire early.
How to retire early
Investors are currently spoilt for choice when it comes to choosing FTSE 100 dividend stocks to retire early.
Companies such as Unilever and Reckitt Benckiser offer a defensive income stream backed up by cash flows from their global consumer businesses.
Meanwhile, Legal & General offers a market-beating dividend yield backed up by the recurring income stream from its long-term asset management business.
In my view, by investing in these businesses, you can significantly increase your chances of being able to retire early. Bitcoin is unlikely to offer the same kind of returns over the long run.
The post Forget Bitcoin! I’d rather buy these FTSE 100 dividend stocks to retire early appeared first on The Motley Fool UK.
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Rupert Hargreaves owns shares in Unilever. The Motley Fool UK has recommended Unilever. 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 2020