Forget the price of Bitcoin! Here’s how I’m going to use FTSE 100 stocks to try and make a profit

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Bitcoin definitely had a year to forget in 2022. Since starting the year around $47,000, it lost more than half of its value to end the year below $20,000. Even though some stocks in the FTSE 100 also suffered heavy losses, very few had a performance comparable to the cryptocurrency. So, as I look at investment options for 2023, here’s why I favor equities over crypto.

Yield potential

Bitcoin does not pay me interest for holding it, the same way I might receive interest from having money in my bank account. Although stocks also do not pay interest, some pay regular dividends. This means that I can generate a return by owning a share.

It may seem like a small difference, but it can really help me, especially this year. I can’t say for sure how global markets will behave. The stocks I buy may lose value. Yet, by reaping dividends along the way, I can still potentially make a profit.

For example, let’s say I decide to buy shares in the miner Rio Tinto. It currently has a 10% dividend yield. If the dividend payouts stay the same next year, but the stock price drops 5%, I’ll still end up with an overall profit of 5% for the year.

Obviously, there is no guarantee of future income payments. But it shows how I can use selective stocks to generate cash next year.

Proven experience

Bitcoin was created in 2009, according to various sources. It has a brief history and probably a bright future. Perspective is one of the reasons I own Bitcoin!

Still, I see the value of owning blue chip stocks that have been around for many decades. These companies have survived regardless of the economic situation that has been imposed on them. It gives me confidence that whatever happens in 2023, these companies can handle it. Not only that, but investors will be happy to buy the shares in the process.

There are countless examples in the utilities, banking, and consumer staples sectors. In fact, there are 19 stocks that have been in the FTSE 100 since its inception in 1984. I believe I can make a profit from holding these stocks by replicating past performance.

The story continues

Of course, past performance does not guarantee future returns. But it certainly gives me an idea of ​​what to expect.

FTSE 100 stocks in my portfolio

I don’t want to be considered completely ignorant of cryptocurrency. Still, when trying to find a home for the vast majority of my investable money, I think it’s wise for me to forget Bitcoin and focus on FTSE 100 stocks instead. This is based on the improved yield dividend payments and lower risk due to the long history of selective businesses.

The post Forget Bitcoin Price! Here’s how I’m going to use FTSE 100 stocks to try and make a profit appeared first on The Motley Fool UK.

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Jon Smith has no position in any of the stocks mentioned. The Motley Fool UK has no position in any of the stocks mentioned. The opinions expressed on the companies mentioned in this article are those of the author and may therefore differ from the official recommendations we give in our subscription services such as Share Advisor, Hidden Winners and Pro. At The Motley Fool, we believe that considering a wide range of information makes us better investors.

Motley Fool United Kingdom 2023

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