Stock market crashes like the one of early 2020 only come round once every 25 years or so. They provide an excellent opportunity for UK share investors to make a fortune by buying low and selling for much higher prices once economic conditions have improved.
You wouldn’t think that by looking at the lack of significant dip buying action since the crash though. And I consider this to be a shocking waste of a brilliant wealth-boosting scenario. The FTSE 100 remains around 20% lower from levels recorded at the start of 2020. The FTSE 250 is also around a fifth lower since trading began on New Year’s Day.
Don’t panic!
It’s true that the global economy faces significant challenges in the near term and beyond. On top of Covid-19, UK share investors also need to consider other serious obstacles to economic growth like Brexit and ongoing bickering over trade tariffs. As a consequence, share investors need to be a bit more careful before investing their hard-earned cash than during more ‘normal’ periods.
Still, these aren’t problems that have discouraged me from continuing to invest in my own Stocks and Shares ISA in 2020. There remain plenty of UK shares which should deliver stunning shareholder returns despite the difficult macroeconomic and geopolitical landscape. And, as I say, a large number of these can be picked up at dirt-cheap prices following the stock market crash.
3 top stocks on my watchlist
I’ve bought shares in Clipper Logistics and Tritax Big Box REIT despite the tough economic backdrop. This is because I’m confident that e-commerce growth should continue to supercharge demand for their services.
I’m thinking of adding Babcock International to my ISA as well. This FTSE 100 stock’s set to enjoy strong profits growth over the next decade as Western defence budgets soar. And today, this UK share trades on a dirt-cheap forward price-to-earnings (P/E) ratio of 6 times.
TBC Group also looks too cheap to miss right now. I don’t believe a forward P/E ratio of 8 times reflects the excellent earnings opportunities that the bright emerging market of Georgia will provide the banking giant in the years ahead. I think global pharmaceuticals colossus GlaxoSmithKline also looks attractive at current prices. It changes hands on a P/E ratio of 12 times for 2020.
Want to get rich with UK shares?
The beauty of share investing is that you don’t have to spend obscene amounts of money to get seriously rich. The average annual return for long-term investors sits between 8% and 10%. This means someone who invests £485 a month in UK shares for 30 years stands a good chance of becoming a millionaire with a sound investment strategy.
So what are you waiting for? In my opinion, the 2020 stock market crash provides a rare opportunity to turbocharge the profits UK share investors can make during the inevitable economic upturn. And The Motley Fool, with its huge library of special reports, can help you make the most of this chance.