UK markets close in 4 hours 38 minutes

Don’t waste your ISA! I’d invest £10K in the worst FTSE 100 stock market crash since 1987

Harvey Jones
The letters ISA (Individual Savings Account) on dice on stacks of gold coins on a white background.

Today is your last chance to use this year’s £20k Stocks and Shares ISA allowance. As the FTSE 100 is suffering the worst stock market crash since 1987, some of you may be wary. 

If I had £10k at my disposal, or even a smaller sum like £2k or £5k, I would take advantage of today’s massive buying opportunity. History shows that a stock market crash like this one can prove a brilliant time to pick up cut-price FTSE 100 shares.

If you plan to hold them for the long term, they can quickly recover from short-term setbacks like this one, and deliver income and growth for decades afterwards. That will be free of all tax, if you buy inside a Stocks and Shares ISA.

Last call for your Stocks and Shares ISA

Today is 5 April, the final day of the 2019–20 tax year. So there is no time to lose.

If you already have a investment platform, you can log on and inject extra funds with a debit card. Otherwise you could register with a new platform, if you have your debit card and National Insurance number to hand.

Time is of the essence, as the clock ticks towards midnight. If you do not use this year’s ISA allowance, you have lost it for good. You don’t have to invest the maximum £20k, but investing something is always better than investing nothing.

Profit from the stock market crash

You really don’t want to waste this stock market crash. The FTSE 100 is down by more than a quarter, so many top companies are trading at bargain valuations, judged by traditional metrics.

Given the uncertainty surrounding the travel sector, I would personally avoid stocks like easyJet or British Airways owner International Consolidated Airlines Group, as there is just too much we don’t know right now.

However, you could hunt through the FTSE 100 for more secure opportunities. Insurer Phoenix Group Holdings looks relatively solid to me. As do delivery firm Ocado Group and generic drugs manufacturer Hikma Pharmaceuticals. Tobacco giants British American Tobacco and Imperial Tobacco should be resilient.

You may have some FTSE 100 ideas of your own. If not, you could play safe, and buy a FTSE 100 tracker instead.

1987 stock market crash was a great time to buy

The worst-ever stock market crash was in October 1987, when the FTSE 100 fell 23% in two days, and 36% overall. Investors who screwed up their courage and bought at the bottom were amply rewarded, as it recovered all of those losses within two years, then powered on.

We do not know how soon the stock market crash will bottom out. Things look gloomy today, but could brighten quickly, as governments belatedly get a grip. Investors who buy FTSE 100 equities inside a Stocks and Shares ISA now could be nicely placed when the rebound comes.

At the very least, shift over some money to secure your allowance, then take advantage of share buying opportunities in the week ahead.

The post Don’t waste your ISA! I’d invest £10K in the worst FTSE 100 stock market crash since 1987 appeared first on The Motley Fool UK.

More reading

Harvey Jones has no position in any of the shares mentioned. The Motley Fool UK has recommended Hikma Pharmaceuticals and Imperial Brands. 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