Stocks and Shares ISAs are brilliant vehicles to try and make a million from UK shares. They allow you and I to invest up to £20,000 every tax year while avoiding the grubby mitts of the taxman. They’re easy to set up and manage, and there’s a wealth of financial service providers that provide them.
That £20,000 Stocks and Shares ISA allowance provides more than enough scope for investors to make a million or more. Studies show that long-term UK share investors make an average return of between 8% and 10% a year. So someone who maxes out their annual allotment by buying shares each month can expect to make between £1m and £1.3m after just 21 years.
2 top FTSE 100 shares
It’s a good idea to follow the lead of those who made millions from their Stocks and Shares ISAs during the last decade to hit this target. They supercharged their long-term returns by buying after the stock market crash that accompanied the 2008/2009 banking crisis. The UK shares they bought rocketed in value during the subsequent economic recovery, making them a fortune in the process.
There’s no reason why you and I can’t repeat the trick this time around. Here are two cheap UK shares I think are terrific buys following the 2020 stock market crash:
- WPP’s been a major casualty of sinking advertising budgets and its shares have fallen 40% in 2020. Pre-tax profits sunk 44% in the first half, but conditions are beginning to slowly improve (the FTSE 100 company won $4bn worth of new business between January to June). And cost-cutting at WPP is hitting the top end of targets and helping to offset its revenues troubles. Right now this UK share can be bought on a forward price-to-earnings (P/E) ratio of 11 times. I reckon this provides an attractive entry point for long-term investors to buy the global advertising giant.
- I’d also load up on Associated British Foods given its shares have fallen by a fifth in the year to date. City analysts expect the Primark owner to experience a 60% profits rebound in the upcoming financial year (to September 2021). And this leaves the UK share dealing on a bargain-basement price-to-earnings growth (PEG) reading of 0.2. Demand for Primark’s cut-price clothing should surge as tough economic conditions hit consumers in the wallet. And global expansion should deliver exceptional long-term profits too. I’m also encouraged by the double-digit profit growth the FTSE 100 stock’s Grocery division is delivering.
Make a million with UK shares
You don’t necessarily need to invest £20,000 in an ISA to make a million though. Say you have no savings at 35 and start investing £500 a month in UK shares. By the time you reach 65 you could have made just over £1m in your Stocks and Shares ISA.
History shows it’s possible for ISA investors to make millions. And with some help from The Motley Fool and its treasure trove of special reports, you could boost your chances of making a million of your own.