Many investors these days are drawn to cryptocurrency because the media keeps running stories about people getting rich from it. But while there is money to be made in cryptocurrency, it’s also a very risky prospect.
Not only might regulatory issues impact the value of cryptocurrency over time, but if the demand for it starts to wane, it could easily take a massive plunge. And that’s on top of the general volatility the crypto market experiences as a matter of course.
As such, while you may want to invest some of your assets in cryptocurrency, you shouldn’t count on it to grow long-term wealth. You should, on the other hand, look at these investing options that are considerably less risky.
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1. Dividend stocks
As the name implies, dividend stocks share company profits with investors, generally on a quarterly basis. Not only can you make money via those dividend payments, but you can make money if your dividend stocks themselves gain value over time. Furthermore, while there’s always the option to collect your dividends and spend that cash, reinvesting your dividends could really help you grow wealth.
2. Fractional shares
Buying individual stocks is a good way to assemble a diverse portfolio that grows in value through the years. But some individual stocks may be a bit too expensive for your budget. If that’s the case, it pays to look at fractional shares.
Fractional shares let you buy a portion of a share of stock if you can’t swing a full share, or if you don’t want to tie up too many investment dollars in a single share. Fractional shares are a great solution for building a diverse portfolio. After all, if you’re not spending a lot on individual companies, you can own a piece of more of them.
3. S&P 500 index funds
Index funds are passively managed funds that aim to match the performance of an existing market index. And while there are different index funds you can focus on, S&P 500 funds are a good bet.
The S&P 500 itself is comprised of the 500 largely publicly traded stocks, and by buying index fund shares, you get instant diversification without having to do a lot of research. Furthermore, the S&P 500 itself has a strong history of not only delivering solid returns, but recovering from market downturns.
While there’s no need to shy away from cryptocurrency completely if it fits within your risk tolerance profile, you should also know that digital coins haven’t been around that long, and it’s hard to predict how much staying power they really have as an investment. On the other hand, stocks have been around for a long time, and they’ve historically rewarded investors who buy them and hold them for many years.
If your goal is to become very wealthy, it’s best not to count on cryptocurrency to get you there. Even though stocks are far from risk-free, they’re a safer prospect than putting your money into digital coins and hoping for solid long-term results.