Forget the Bitcoin price! Id invest 5k like this to get rich and retire early

With the Bitcoin price having risen by over 90% in 2019, its returns were significantly ahead of those of the FTSE 100. The index delivered a total return of 16%, which is almost twice its long-term annual average.

As such, many investors may feel that buying Bitcoin could be a better means of building a retirement portfolio. However, the virtual currency faces numerous risks that could mean that the FTSE 100 offers significantly stronger long-term potential when it comes to improving your chances of retiring early.

Even though the FTSE 100 delivered a strong performance in 2019, many of its members appear to offer good value for money. Sectors such as banking and retail have continued to be unpopular over recent years, with investors adopting a cautious attitude due in part to global economic risks. As such, there are opportunities to buy a wide range of stocks while their valuations are significantly below their long-term historic averages. This could mean that investors can generate relatively high returns in the coming years.

Certainly, there are risks facing the world economy. Since the FTSE 100 generates around two-thirds of its revenue from outside of the UK, they could weigh on its performance. Threats such as geopolitical uncertainty in the Middle East and a continuing trade war between the US and China may cause investors to adopt a cautious stance towards riskier assets. This may produce challenging performances in the short run, but could present opportunities to buy stocks at even lower prices for the long run.

Therefore, building a portfolio of shares in a tax-efficient account such as an ISA could be a shrewd move. It may lead to high returns which, when compounded, improve your financial prospects and enable you to retire early.

While the price of Bitcoin could feasibly move higher in the coming months, it is a relatively risky asset that could easily experience a tough period. The threat of other virtual currencies may mean that investor interest in Bitcoin recedes to some degree. It also faces regulatory risks, with many lawmakers and central banks around the world currently having a negative view of cryptocurrencies.

Additionally, there is no way of knowing if Bitcoin offers good value for money following its price rise. It has no fundamentals, and its price level is decided by investor sentiment. Should it decline, the track record of Bitcoins performance shows that it can fall at a fast pace. This could lead to investors nursing heavy losses, and not knowing whether they should hold or sell an asset for which they are unable to ascertain an accurate valuation.

While investing in shares may take time to impact favourably on your financial situation, over the long run, the FTSE 100s track record shows that it can help you to retire early. Bitcoin could generate further growth in the short run, but it continues to be a riskier and less attractive means of improving your financial prospects.