Ethereum (CRYPTO:ETH) has been shattering records right and left. Over the past year, its price has soared by more than 1,600%. In the past month alone, it’s up nearly 50%, as of this writing. It’s even surpassed crypto king Bitcoin (CRYPTO:BTC), which has “only” increased 380% over the past year.
If you’re itching to jump on the cryptocurrency bandwagon, you’re not alone. It’s hard to ignore returns like these, and many investors are scrambling to buy crypto in an attempt to make a lot of money overnight.
However, crypto is an incredibly risky investment, and it’s more likely you’ll lose money than become a millionaire. Although Ethereum has seen incredible gains over the past few months, that doesn’t necessarily make it a good investment. There is one other type of investment, though, that’s much safer — and it’s much more likely to make you a millionaire.
Image source: Getty Images.
Why is Ethereum so risky?
All cryptocurrencies are risky because they are highly speculative. Many crypto supporters believe it will someday become a mainstream form of currency, which could disrupt the banking and finance industries.
Right now, though, very few merchants accept crypto as a form of payment. In fact, only 2,300 U.S. businesses accept Bitcoin (which is the most widely accepted form of cryptocurrency), according to research from Fundera. Considering there are more than 30 million businesses in the U.S., that’s only around 0.007% that accept Bitcoin as payment. Ethereum isn’t quite as popular as Bitcoin, which puts it at even more of a disadvantage.
Without widespread adoption, it will be challenging for crypto to see long-term success. Nobody knows what the future holds, so buying crypto right now is an incredibly risky move that may or may not pay off.
Where to invest instead
One of the best ways to make a lot of money in the stock market is to take a slow but steady approach. By investing in solid companies and holding them for the long term, you could potentially make millions.
You have countless investments to choose from, but one of the safest (and most lucrative) is the S&P 500 ETF.
An S&P 500 ETF is an investment that tracks the S&P 500 stock market index. In other words, it includes stocks from 500 of the largest and strongest companies in the U.S. This limits your risk significantly because these companies are the most likely to survive market turbulence and experience long-term growth.
It’s also possible to make a lot of money with the S&P 500 if you invest consistently. Since its inception, the S&P 500 has earned an average rate of return of around 10% per year. This doesn’t necessarily mean you’ll see 10% returns each and every year. Rather, some years you’ll earn higher-than-average returns, while others you’ll earn lower returns or even experience losses. Over time, though, those highs and lows should average out to around 10% per year.
Say you begin investing $500 per month in an S&P 500 ETF while earning a 10% average annual return. Here’s approximately how much you could accumulate, depending on how many years you continue to invest:
| Number of Years | Total Savings |
|---|---|
| 10 | $96,000 |
| 20 | $344,000 |
| 30 | $987,000 |
| 40 | $2,656,000 |
Source: Author’s calculations.
By investing consistently and leaving your money alone for as long as possible, you could potentially become a multimillionaire with S&P 500 ETFs.
Ethereum may be one of the hottest investments right now, but because it’s so risky, you could lose more than you gain. With S&P 500 ETFs, however, your money will be safer and you can still potentially become a millionaire someday.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.