If you're hoping to become a millionaire, investing in a speculative cryptocurrency like Shiba Inu (CRYPTO:SHIB) might seem like a fast-track way to get there.
The meme-based cryptocurrency was created in response to another virtual coin developed based on a meme called Dogecoin. Interest in it has surged this year, sending prices skyrocketing. And since a lot of people have very publicly made money in SHIB, you may be tempted to try to buy into it to get rich, as well.
The reality, however, is there's a much more reliable path to amassing a million-dollar nest egg by investing. Here's what it is.
If you're looking to reach millionaire status, this is a better bet
If you want your best chance at becoming a millionaire, you're far better off putting your money into an S&P 500 index fund than investing in Shiba Inu. And there's a simple reason for that.
The S&P 500 has a proven track record. An index fund that tracks its performance is a relatively low risk, very simple way to invest. In fact, the S&P 500 is often viewed as a proxy for the stock market itself. And when you invest in an index fund tracking the S&P 500, you gain exposure to around 500 of the largest and most established companies in the United States -- most or all of which are likely to stand the test of time.
Unlike SHIB, an S&P 500 fund isn't going to produce 55,356,064% gains in less than a year. But it's also not going to see a double-digit plunge in its price in a matter of days. That could very well happen to Shiba Inu. And the price of an S&P index fund isn't going to drop to $0, which is a very real possibility once people lose interest in Shiba Inu and pull their money out to buy other investments.
The bottom line is, if you invest enough money in an S&P 500 fund every month and leave your money to grow, the financial index's consistent history of producing 10% average annual returns over decades makes it all but certain that you're going to end up a millionaire once enough time has passed.
The problem with trying to become a millionaire by investing in Shiba Inu
If you're hoping Shiba Inu will make you rich, there are a few big issues to consider.
First and foremost, if you didn't get in on the ground floor -- and most people don't because they don't hear about these social-media sensations until it's too late -- there's an outsized risk of buying very high and selling very low. Shiba Inu has already seen skyrocketing prices, despite the fact it has no proven track record of performance or practical utility in the real world. It's just as likely it will plummet in value quickly rather than continue its meteoric rise.
That means in order to get rich via Shiba Inu, you have to put money at risk that there's a very real chance you won't get back -- and you need to get lucky enough to time your investment correctly so you happen to buy in when its on the upswing.
Unless you have a crystal ball and can predict exactly the right moment to buy and sell or you have reason to believe the coin will stand the test of time for decades through good economies and bad ones, it's very unlikely your investment in it will make you a millionaire. Unlike an S&P 500 index fund, investing in Shiba Inu is about as far from a sure thing as you can get.