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Gold and Bitcoin became increasingly popular in 2019. They recorded strong growth that may continue in the short run. As such, many investors may be thinking about adding them to their own portfolios.

However, they both could fail to offer a superior risk/reward opportunity compared to the stock market. With many FTSE 100 and FTSE 250 shares currently trading on low valuations and having improving growth prospects, they could be a better means of making a million.

Risky prospects

Bitcoin may have more than doubled at its peak in 2019, but its risks continue to be high. Investors have no means of ascertaining whether its current price level represents good value for money, since the virtual currencys price is dependent on sentiment rather than fundamentals. As such, they may be buying an asset which is grossly overpriced.

Furthermore, Bitcoin has a limited size, as well as competition from other cryptocurrencies, that could inhibit its potential to replace traditional currencies. Alongside its lack of infrastructure, this may mean that it fails to deliver on its long-term potential.

Although gold is a far less risky asset to hold than Bitcoin, its long-term return prospects could be limited. History has shown that buying shares during uncertain periods for the economy allows investors to capitalise on low valuations that can produce higher returns. Therefore, buying gold after its recent price rise, and while many shares appear to offer wide margins of safety, could be the wrong move for long-term investors to make.

Return potential

Clearly, 2020 could prove to be a volatile year for the FTSE 100 and FTSE 250. Despite them relying on international markets for much of their income, they continue to be highly dependent on the UK. With Brexit risks set to continue to be high as the process of leaving the EU continues, it would be unsurprising for there to be periods of declining share prices ahead in the coming months.

This could prove to be a worthwhile buying opportunity for long-term investors. As mentioned, lower valuations can provide the chance to purchase high-quality businesses while they offer wide margins of safety. Through buying a diverse range of companies that have solid balance sheets, favourable growth outlooks and strong cash flow, it may be possible to position your portfolio for long-term capital appreciation.

Outlook

As such, now could be the right time to focus your capital on the stock market, rather than on Bitcoin and gold. Certainly, the virtual currency and precious metal have been strong performers in 2019. But their risk/reward ratios may be less favourable compared to the stock market.

With the cost and ease of building a portfolio of companies having become more attractive in recent years, now could be the right time to pivot from gold and Bitcoin to a range of shares. It could improve your chances of making a million.

Bitcoin offered the promise of riches. But after the last two years, I suspect most coin owners are more familiar with the sinking feeling that comes as the price slides lower (Bitcoin is down by nearly 50% since July).

A few lucky people bought Bitcoin when it was cheap and were disciplined or lucky enough to sell at the top. But sadly, history suggests that most people who make big profits in a speculative boom fail to hold on to them.

I think the real secret of how to become rich lies elsewhere. In this article I want to share this secret with you and explain how Im using the same technique to build my retirement savings. I reckon it should work for you too.

A simple truth

All the rich people Ive ever known have one thing in common. Even though theyve come from different backgrounds and made money in different ways, this one truth ties them together.

To be clear, Im not talking about people with high incomes who spend all their cash on a lavish lifestyle. By rich, I mean people who are financially secure who can live comfortably without needing to work for a living.

What do these people have in common? In my experience, they all understand the power of compounding.

How does compounding work?

Compounding means earning interest on previous years interest.

For a business owner, it means reinvesting last years profits back into the business, rather than spending the money on holidays or a flash car. By doing this, businesses can expand more quickly, hire better staff and develop new services. The end result is that the earning power of the business grows much more quickly than it would have done otherwise.

For stock market investors, compounding means using last years dividends and any trading profits to buy more shares. Never withdrawing a penny.

Earn 75% extra

Lets look at a simple example. Imagine a stock that delivers average annual returns of about 8%. Each year, the share price rise by 3.5%, while the remaining 4.5% return is paid out as a dividend. This is similar to the historical average returns from the UK stock market.

Lets imagine you invested 10,000 in this stock 10 years ago.

If youd withdrawn the dividend each year and relied on share price growth, then your investment would be worth 14,106 today an increase of 41%.

On the other hand, if youd used the dividend cash to buy more shares each year, then your investment would be worth 21,589 today an increase of 116%.

As a result of compounding your dividend income, youd have earned 75% extra in 10 years.

Thats the power of compounding. If you reinvest your income, you turbocharge your profits.

A short cut to wealth

Rich people understand that compounding provides a short cut to wealth.

The good news is that you dont need to be a business owner or a stock market wizard to get rich with compounding. A FTSE 100 index tracker fund or a basket of dividend-paying stocks should work very well.

The secret to successful compounding is to keep paying in and never to withdraw anything until you have enough to retire.

Investing and risk go hand in hand. Thats no surprise. All investments involve an element of risk. With some, this risk is more inherent than elsewhere. Look at Bitcoin, which I perceive as a wildly volatile and dangerous investment, compared to a Cash ISA. But although you probably wont make a paper loss with the Cash ISA, youre unlikely to keep up with the rate of real-life inflation. Therefore, both of these investments are layered with risk.

Time in the market

Looking at Bitcoin, my concerns are that the price is too unpredictable. Admittedly, when viewed on a short-term basis, the same conclusion can be drawn about shares.

However, I know that if a companys revenue has grown over the years, if it is managed by good people and has a competitive edge over its rivals, the likelihood is that its share price will grow over time.

Investing successfully takes years. Risk is usually lessened by the length of period that an investor is in the market. Reinvested dividends and compound interest can add to growth.

Warren Buffett understands this, and encapsulated the logic by saying that someone is sitting in the shade today because someone planted a tree a long time ago.

Only invest in what you understand

Ill admit it: I dont fully understand Bitcoin. Ive read a lot about cryptocurrencies, Ive watched documentaries about them too. And I know people are making huge gambles that this could be the currency of the future.

However, to draw that conclusion seems like a huge leap of faith to me.

I can only justify investing in something that I fully understand. Thats why my preferred stocks tend to be in businesses that are well-established and operate in traditional industries. If such a firm has a new way to generate revenue, its likely that Id seek out something in it to invest in, but only if I understand it.

Buffetts tip here is to never invest in a business you cannot understand.

Avoiding disaster

Dont lose money. Thats the advice ingrained in most investors minds. Some of Warren Buffetts biggest successes have been by not falling victim to the failings of the market.

Take the dotcom bubble. Valuations of tech companies skyrocketed, and then plummeted. People lost millions from their portfolios.

But not Warren Buffett, who had managed to avoid the bubble because he was reluctant to invest in something he didnt understand.

Buffett only tends to invest in businesses hes confident will make him money. He wouldnt part with cash for outside odds. Protecting capital needs to be an investors primary goal.

Investing should not feel like youre at the casino. Instead, your philosophy should be more calculated, like focusing on great companies with growth prospects. It shouldnt feel risky.

As Buffett has said in the past, there are two rules of investing: Rule No. 1: never lose money. Rule No. 2: never forget rule No.1.

When I looked for a new Cash ISA just before Christmas, the top interest rate I could find with instant access was just 1.35%. Even if I was willing to tie up my cash for five years (Im not) the highest rate available was just 2.03%.

I do have a Cash ISA, which I use for short-term savings and for my emergency fund. But I dont keep my retirement savings in cash. If I did, Id have no chance of hitting my savings goals.

In this article Im going to discuss a FTSE 100 share yielding 6.6% that I would buy for a reliable cash income and for retirement saving.

A dividend heavyweight

As youll probably guess, most of my spare cash goes into my Stock and Shares ISA. This provides the same tax-free benefits as a Cash ISA, but it gives me the chance to earn much higher rates of return than I would in cash.

I prefer to invest in stocks that offer high dividend yields, as long as I think the dividend payouts are sustainable. One FTSE 100 stock I rate highly as an income choice is Asia-focused banking giant HSBC Holdings (LSE: HSBA).

This Anglo-Chinese bank has a market cap of 122bn and has been in business for more than 150 years. HSBC didnt need a bailout during the financial crisis. And even during that extreme period of our financial history, it continued to pay a (reduced) dividend unlike most UK rivals.

Low risk

HSBC is by far the biggest UK-listed bank. Its exposure to Asia adds complexity to the investment story, but I think it also provides a long-term opportunity. Asia especially China is a part of the world thats developing fast and seems likely to continue growing.

For a UK-based investor like me with no special insight into Asian markets, investing directly in Asia could be risky. But owning shares in London-based HSBC gives me exposure to the same markets, with much less risk.

Indeed, low risk is one of the main attractions of this share, in my view. HSBCs size means that its struggling to grow in todays low-interest-rate world. But this global banking group is still in pretty good health.

The banks latest results show that its adjusted pre-tax profit rose by 6.8% to $12.5bn during the first half of 2019. Return on average tangible equity, a measure of profitability, rose from 9.7% to 11.2%.

Why Id buy HSBC today

HSBC admits that current market conditions are making it difficult to achieve further gains. But for me, this isnt the point. The bank is profitable enough and is returning some of its spare cash to shareholders through share buybacks ($1bn this year) and dividends.

Interim chief executive Noel Quinn is taking an active role in turning things around, and seems likely to be confirmed as permanent boss next year.

In the meantime, the shares are trading at a discount of nearly 10% to their book value and offer a well-supported 6.6% dividend yield. That looks good value to me. If I didnt already own enough bank stock, I would be buying these shares.

Christmas is a time for generosity. With that in mind, today Im going to share with you four of my top wealth-boosting tips. In my view, all of these tips could help grow your savings in 2020.

Ditch the Cash ISA for long-term savings

A lot of people save their money into Cash ISAs thinking theyre doing the right thing because ISAs are tax-free. The problem with Cash ISAs though is that the interest rates on offer at present are abysmal. Currently, the top rate is around 1.35%, which is less than UK inflation.

If your long-term savings are earning that kind of interest, youre just not going to get ahead because inflation is going to erode the spending power of your money over time. In my opinion, youre much better off saving into a Stocks & Shares ISA, where you can get your money working hard for you (see tip number four).

The Lifetime ISA could get you 1,000 for free

If youre aged between 18 and 40, Id also recommend checking out the Lifetime ISA.

When you make a contribution into this ISA, the government will give you a 25% top-up for free (on contributions of up to 4,000 per year up to age 50). This means that if you put in the full 4,000, the government will gift you 1,000!

This is an incredible deal thats definitely worth taking advantage of. Just be aware that you cant access money in a Lifetime ISA (without harsh penalties) until you turn 60 or buy your first property.

Free money for retirement

Did you know that if you make a contribution into a pension account such as a Self-Invested Personal Pension (SIPP), the government will add in some extra money for you too as a reward for saving for retirement? This is called tax relief.

If youre a basic-rate taxpayer, youre entitled to 20% tax relief on contributions (higher-rate taxpayers get an even better deal). What this means is that if you put 80 into a pension account, the government will top up your contribution to 100. Put in 800 and its topped up to 1,000!

This really is a generous offer from the government. If youre saving for retirement, youd be mad not to take advantage of it.

Use stocks to boost your wealth

Finally, my top wealth-boosting tip is: use the stock market to grow your long-term savings.

A lot of people are afraid of the stock market. They see investing in stocks as a form of gambling. But heres the thing over the long run, the stock market tends to rise. This means that if youre patient, theres a good chance youll make money.

Had you been invested in stocks this year, youd be pretty happy right now. As I write this, the FTSE 100 index is up around 17% for the year. Plenty of individual stocks and funds have done way better. For example, shares in JD Sports Fashion are up around 130% year to date, while Boohoo shares have climbed around 80%.

If one of your goals in 2020 is to boost your wealth, I think stocks should be part of your strategy.

Christmas is a time for generosity. With that in mind, today Im going to share with you four of my top wealth-boosting tips. In my view, all of these tips could help grow your savings in 2020.

Ditch the Cash ISA for long-term savings

A lot of people save their money into Cash ISAs thinking theyre doing the right thing because ISAs are tax-free. The problem with Cash ISAs though is that the interest rates on offer at present are abysmal. Currently, the top rate is around 1.35%, which is less than UK inflation.

If your long-term savings are earning that kind of interest, youre just not going to get ahead because inflation is going to erode the spending power of your money over time. In my opinion, youre much better off saving into a Stocks & Shares ISA, where you can get your money working hard for you (see tip number four).

The Lifetime ISA could get you 1,000 for free

If youre aged between 18 and 40, Id also recommend checking out the Lifetime ISA.

When you make a contribution into this ISA, the government will give you a 25% top-up for free (on contributions of up to 4,000 per year up to age 50). This means that if you put in the full 4,000, the government will gift you 1,000!

This is an incredible deal thats definitely worth taking advantage of. Just be aware that you cant access money in a Lifetime ISA (without harsh penalties) until you turn 60 or buy your first property.

Free money for retirement

Did you know that if you make a contribution into a pension account such as a Self-Invested Personal Pension (SIPP), the government will add in some extra money for you too as a reward for saving for retirement? This is called tax relief.

If youre a basic-rate taxpayer, youre entitled to 20% tax relief on contributions (higher-rate taxpayers get an even better deal). What this means is that if you put 80 into a pension account, the government will top up your contribution to 100. Put in 800 and its topped up to 1,000!

This really is a generous offer from the government. If youre saving for retirement, youd be mad not to take advantage of it.

Use stocks to boost your wealth

Finally, my top wealth-boosting tip is: use the stock market to grow your long-term savings.

A lot of people are afraid of the stock market. They see investing in stocks as a form of gambling. But heres the thing over the long run, the stock market tends to rise. This means that if youre patient, theres a good chance youll make money.

Had you been invested in stocks this year, youd be pretty happy right now. As I write this, the FTSE 100 index is up around 17% for the year. Plenty of individual stocks and funds have done way better. For example, shares in JD Sports Fashion are up around 130% year to date, while Boohoo shares have climbed around 80%.

If one of your goals in 2020 is to boost your wealth, I think stocks should be part of your strategy.