The recent market crash may have reduced the appeal of even the best UK shares to many investors. They may be concerned about factors such as Brexit, coronavirus, and a weak economic outlook.
However, the long-term prospects for British stocks appear to be relatively impressive. Their low valuations and recovery potential may mean they can help you to build a surprisingly large retirement portfolio.
As such, now could be the right time to avoid popular assets such as Bitcoin and buy a diverse range of stocks for the long run.
Investing money in the best UK shares
Some of the best UK shares are currently trading at low prices after the stock market crash. History suggests that such situations can present buying opportunities. That’s because investors may not have factored in the recovery potential across a wide range of sectors.
For example, the UK economy may face a period of weak growth that includes high levels of unemployment. While this is likely to negatively impact on the short-term financial performances of many companies, the track record of the economy shows it’s very likely to return to positive growth.
That process may be quickened by fiscal and monetary policy stimulus that’s already been announced. That should help improve trading conditions for many businesses over the long run.
Furthermore, the valuations of many of the best UK shares suggest that investors may have factored in a challenging outlook for the economy. Some stocks trade significantly below their historic average values at present, despite having solid balance sheets and wide economic moats. They could outperform the wider market and enhance your portfolio’s return prospects.
Taking advantage of buying opportunities
Clearly, it’s difficult to buy the best UK shares today while their outlooks are uncertain. However, they could offer lower risks and higher return prospects than other assets such as Bitcoin. The virtual currency has no fundamentals. This means it’s extremely difficult to ascertain its value. Furthermore, regulatory risks regarding its future are likely to persist. Competing cryptocurrencies could also reduce demand for Bitcoin.
By contrast, investors can analyse British stocks before buying them to identify their financial strength, competitive advantages and long-term growth prospects. This allows investors to deduce whether they trade at an attractive price level and if they can deliver capital growth as the economy recovers.
Over time, investing an amount such as £10k in the best UK shares could lead to a surprisingly large nest egg. Assuming an 8% return that’s in line with the stock market’s past performance, a £10k investment could turn into £100k over a 30-year period.
As such, for long-term investors, now could be an opportune moment to buy undervalued stocks for the opportunity to outperform the market and boost your retirement prospects.
The post Forget Bitcoin! I’d invest £10k in the best UK shares right now to get rich and retire early appeared first on The Motley Fool UK.
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