Cryptocurrency owners will recognise days like this: check the Bitcoin price, toddle off to make a cup of tea and when you look again you’re £500 up. Then make yourself a slice of toast to celebrate and by the time you return, you’ve lost £1,000.
Volatility is back in the Bitcoin price. Since the end of June, the world’s largest cryptocurrency has also lost 47% of its value.
It’s certainly tempting to buy Bitcoin in the vain hope of making big profits. Lord knows I’ve done it myself. After all, it’s the future of money and the currency of the internet, right?
Cryptocurrency remains widely under-regulated worldwide, and nervous central banks could still decide to regulate Bitcoin out of existence. If you want to wake up in a cold sweat having lost thousands of pounds overnight, then sure, give it a punt. If you actually want to make yourself richer, there are better ways.
Fund a happy retirement
The first thing I would do instead is look at a dividend-paying UK ETF to take advantage of the best-paying companies in the FTSE 100. One of the most highly regarded of these is the BlackRock-run iShares UK Dividend UCITS ETF. It produces a 6.6% dividend yield, which comfortably outstrips the market average by tracking the price of the 50 highest payers in the UK’s largest index of companies by market cap.
Secondly, I would look at a popular actively-managed fund with a good reputation. Dealing charges tend to be free, which means if you only have small amounts to invest you aren’t automatically losing money every time you buy in.
Common favourites like the Lindsell Train Global Equity fund have taken a dip recently, partly because of the fallout from the Neil Woodford debacle infecting investor confidence, and partly because of softness in global growth and there being no end in sight to the long-running US-China tariff war.
However, any price drop means a better entry point for new investors, and taking a long-term view will show you why Nick Train and Mike Lindsell remain among the UK’s richest fund managers.
One fund that doesn’t get as much press but is equally worth your time is the Evenlode Global Income fund, which focuses on companies with globally diverse income streams, truly sustainable dividend growth, and high levels of free cash flow. Its top five holdings are Unilever, Henkel, Intel, Medtronic and Essilor and at £544m, it’s not the largest out there, but is one of the best-run in my opinion. Dividends are paid four times a year, and co-managers Ben Peters and Chris Elliot make a specific point of not adding in or taking away stocks from the fund too frequently. This low turnover allows them proper time to make the most of growth across a diversified portfolio.
Long and short of it
You might feel out of the loop if you haven’t apportioned at least some of your portfolio to Bitcoin. But if you’ve ignored the hype then you’ll likely make yourself richer than the crypto crowd.
If you’re serious about making yourself richer to actually enjoy your retirement, there are smarter ways to go about it.
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Tom has a small position in Bitcoin. 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