I don’t think it is too much of a generalization to say that most people would like to be rich. While ‘rich’ is a subjective word in itself (how much money do you need to be rich?) some would say that being rich isn’t even to do with money.
Fortunately, this is not an article on philosophy, and so I make the statement that most people are looking for investments which will grow in value, generating them extra money. In recent years, there has been a rise in demand for Bitcoin, plus other cryptocurrencies. Indeed, with the rally to $20,000 seen a couple of years ago, there was money to be made from trading Bitcoin.
Yet it appears the bubble has burst, or at least sprung a leak, and the hype surrounding Bitcoin has decreased, to the point where it makes sense to turn our eyes elsewhere.
Penny stocks, some claim, are an investor’s gold mine. Again, this may be true in select cases; you can strike lucky and ride tremendous short-term growth in the stock value. In fact, Ford Motor Company was once a penny stock.
Yet, in my humble opinion, getting rich off penny stocks is more luck than judgement. So many firms remain small in nature and small in market capitalization that it is impossible to make money off them.
This brings me to my main point – that Bitcoin and penny stocks may by glitzy and appealing due to incredible short-term returns, but the risk of losing money is very high. Therefore, if you are genuinely looking to get rich, temper your short-term expectations and look to invest in a company that could see strong price appreciation, but over a longer time period.
For example, take Marks & Spencer (LSE: MKS). The retailer has been struggling, being relegated from the FTSE 100 earlier this year. The share price is currently at the lowest point since 2000.
Depending on who you speak to, M&S may still have the worst to come. The business is trying to make up for lost time and pivoting to digital and online delivery. Latest half-year results out last week showed profit down 17%.
However, I am quietly optimistic about the longer term future of the firm. The partnership with Ocado goes live next year, which I think will give it a huge boost by catching on to the moving sentiment of shoppers.
Targeted cost savings for 2020–21 stand at £350m, with store closures and a pivot to online being the focus. It will take a while for the full turnaround to happen (if indeed it does), but it is going in the right direction.
The cheap share price at the moment is one that could genuinely double your money over the next five years or so. If you asked me whether I would prefer shares in M&S versus Bitcoin or a penny stock, I certainly know what I would choose.
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Jonathan Smith and The Motley Fool UK has no position in any of the shares mentioned. 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