The 2020 stock market crash first shocked the world almost six months ago to the day. Yet its impact on investor appetite for UK shares continues to be devastating. The FTSE 100 hasn’t made any real progress since late April and, as I type, remains anchored around 6,000 points. The FTSE 250 hasn’t fared much better.
This represents one of the biggest wasted opportunities for share investors in modern times, in my opinion. The FTSE 100’s down 20% since the start of the year, meaning there are plenty of top-quality UK shares trading at bargain-basement levels. You and I have a chance to buy them for next to nothing today. And then watch them explode in value as economic conditions steadily improve.
Buying the FTSE 100 after crashes
Another stock market crash could well be around the corner, given that Covid-19 news flow has worsened again recently. But this is no reason for you and I to stop buying UK shares in something like an ISA. Periods of extreme stock market volatility are nothing new. And, over the long run, their impact on overall shareholder returns tend to be negligible.
Let’s look at the 2008/2009 stock market crash for a moment. Many investors were reluctant to buy following the banking crisis, and it wasn’t just because of the threat of a prolonged and painful economic downturn. The prospect of a complete meltdown of the global banking system represented an unprecedented threat.
Investors also had to consider the possiblity of major European economies like Italy and Spain going bankrupt and the eurozone imploding.
Those who were brave enough to keep buying UK shares made an absolute fortune though. The FTSE 100 doubled in value in the 10 years from the 2008/2009 market crash. And, as a consequence, the number of Stocks and Shares ISA millionaires exploded.
UK shares could help you get rich!
The bounceback following the 2008/2009 market crash was no isolated event. History shows us that stock markets always recover from crashes to reach new record highs. Buying UK shares today then, could allow you to steal a march on those who dither and turbocharge your returns.
Buyers of UK shares don’t need to spend a fortune in order to get rich either. It’s been proven that long-term investors can make an average annual return of up to 10%.
So someone who invested £100 a month in something like a Stocks and Shares ISA could realistically expect to make a pension pot worth more than half a million pounds (£555,035 to be exact) over the space of 40 years. Not a bad return for such a modest outlay, I’m sure you’d agree.
As I say, another stock market crash could be around the corner. But this isn’t damaging my appetite for UK shares. And I’m not waiting for another crash before getting my chequebook out either. There are too many cut-price champions too good to miss today.
And with the help of experts like The Motley Fool it’s possible to dig these out and make spectacular returns over the long run.