The stock market crash might appear to be the worst time to start investing in stocks and shares. At time of writing, the FTSE 100 index is trading at just above 5,000 levels. This is an over 24% drop from the start of March and an over 33% drop from the start of 2020. But I think it would be one of the best times to invest my first £500. Here’s why.
The choicest FTSE 100 stocks are available at huge discounts. I reckon that with quantitative easing underway, financial markets may well be in a much better place sooner than it appears likely right now. In fact, prices of select stocks have already risen sharply in the past few days. So the time to buy these shares is right now.
Online delivery companies’ star’s rising
One example is the FTSE 100 online grocer Ocado and another is the food delivery company Just Eat Takeaway.com. Both companies’ share prices have been rising since the end of last week as people order online to self-isolate the best they can.
At time of writing, OCDO’s price is almost 25% up from last week and JET’s price has risen by 10%. I like these shares because of their long-term potential thanks to increased use of online services. I think that barring brief corrections, their prices are more likely to rise overtime than not.
But if you think that their price has run up a lot already, I won’t blame you. After all, OCDO is now trading at close to the highest levels in 2020.
Beaten down FTSE 100 consumer defensives are good buys
The good news is that there are plenty more FTSE 100 shares to consider. As public places close down as a precautionary measure, alcohol stocks like those of Diageo are taking a beating. While delivery companies’ stocks have risen over the past week, DGE is down by 14.4%.
Consumer defensive shares are normally spared the worst brunt of economy driven meltdowns, but the coronavirus has managed to hit DGE this time. Yet, from a long-term perspective I believe this is one stock that’ll give great investment returns. This is based on its market leadership position, its past financial health, and the potential for quick bounce-back in demand once the pandemic is behind us.
Consider cyclicals in this stock market crash
If you have the stomach for it right now, consider cyclicals too. Specifically, I’m talking about FTSE 100 real estate companies. Their share prices had a sharp run-up after the election results came out in December last year. If that left you, like me, feeling like you’d missed the rally, then the time to invest in them is now.
Real estate share prices have dropped dramatically. One example is Persimmon, a share I have suggested buying in the past. Since last week alone, its price has fallen by over 36%. Of course property will be one of the worst hit segments if the recession well and truly sets in. So, investing in PSN will be an exercise in patience. But as investors in the stock would have discovered at the end of last year, the rewards of patience may well be worth it.
The post Here’s how I’d invest my first £500 in FTSE 100 stocks in this market crash appeared first on The Motley Fool UK.
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Manika Premsingh has no position in any of the shares mentioned. The Motley Fool UK has recommended Diageo and Just Eat Takeaway.com N.V. 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.
Motley Fool UK 2020