Stock market recovery: how I’d invest £1,000 right now in UK shares

This post was originally published on this site

The stock market crash has caused a wide range of UK shares to trade at low prices. Over the long run, they could produce impressive returns in a stock market recovery. Its likelihood of occurring may have increased in the minds of some investors following positive data on a coronavirus vaccine.

© Provided by The Motley Fool Chart displaying growth

Of course, indexes such as the FTSE 100 and FTSE 250 have long track records of recovering from downturns to post new record highs. Through buying high-quality companies while they trade at low prices in a tax-efficient account such as a Stocks and Shares ISA, it’s possible to capitalise on their growth prospects.

Load Error

Investing £1,000 in UK shares through an ISA

An ISA may be a sound means through which to invest £1,000 in UK shares to capitalise on a likely stock market recovery. It is a low-cost means of investing money in a tax-efficient manner. Over the long run, the capital gains tax and dividend tax that’s avoided from using an ISA may be surprisingly high.

Of course, the investments made within an ISA will have a major impact on its ultimate size. After the stock market crash, it may be tempting to purchase the cheapest FTSE 100 and FTSE 250 shares. However, focusing on the quality of a company, and paying a higher price if necessary than for other stocks, could pay off in the long run.

For example, a business with a better market position and a solid financial situation may be more likely to capitalise on improving growth trends as part of a stock market recovery. It may also become more popular among investors as sentiment improves.

Clearly, paying too much for UK shares could limit the scope for capital appreciation in the long run. However, it’s worth striking a balance between quality and price. This may provide a sound means of obtaining the most promising investments available in the FTSE 100 and FTSE 250.

Focusing on a long-term stock market recovery

Recent gains for many UK shares may mean investor expectations are high regarding the prospects for a stock market recovery. However, it was only until very recently that a second stock market crash seemed more likely.

Therefore, when investing £1,000, or any other amount, in FTSE 100 and FTSE 250 shares, managing short-term expectations may be crucial. There’s a realistic prospect of high volatility across the stock market in the short run. As such, having a long-term viewpoint on any company purchased may be key to generating high returns in the coming years.

Previous stock market recoveries have produced exceptional returns for a wide range of UK shares. Investors who’ve benefited from them the most have often been those individuals who’ve given their portfolios the time they need to deliver turnarounds. This may mean short-term difficulties in return for a full recovery from the 2020 stock market crash.

A Top Share with Enormous Growth Potential

Savvy investors like you won’t want to miss out on this timely opportunity…

Here’s your chance to discover exactly what has got our Motley Fool UK analyst all fired up about this ‘pure-play’ online business (yes, despite the pandemic!).

Not only does this company enjoy a dominant market-leading position…

But its capital-light, highly scalable business model has previously helped it deliver consistently high sales, astounding near-70% margins, and rising shareholder returns … in fact, in 2019 it returned a whopping £150m+ to shareholders in dividends and buybacks!

And here’s the really exciting part…

While COVID-19 may have thrown the company a curveball, management have acted swiftly to ensure this business is as well placed as it can be to ride out the current period of uncertainty… in fact, our analyst believes it should come roaring back to life, just as soon as normal economic activity resumes.

That’s why we think now could be the perfect time for you to start building your own stake in this exceptional business – especially given the shares look to be trading on a fairly undemanding valuation for the year to March 2021.

Click here to claim your copy of this special report now — and we’ll tell you the name of this Top Growth Share… free of charge!

More reading

Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

The post Stock market recovery: how I’d invest £1,000 right now in UK shares appeared first on The Motley Fool UK.

Continue Reading