The stock market crash will have made some investors reluctant to buy FTSE 100 stocks. It isn’t hard to see why. The index of top UK shares plunged by a third in March, along with markets all over the world, due to Covid-19 lockdown.
The crash could have been even more brutal. Investors were only saved by a massive injection of global liquidity by the US Federal Reserve, backed by other governments and central bankers.
It’s amazing what trillions of dollars worth of stimulus can do to confidence. That gave investors the belief they needed to stop selling FTSE 100 stocks, and buy them instead. Investors who sold in March will be kicking themselves today, as the FTSE 100 recovery was almost as swift as the market crash.
Stock market crash buying opportunity
Despite that, the FTSE 100 is still trading around 17% below its pre-crash peak of just over 7,500. That’s one reason why I think today is a great time to buy FTSE 100 stocks. You can buy lots of top companies at bargain valuations.
Buying stocks today may sound risky, but history shows the FTSE 100 always recovers its losses, if you give it time. This is therefore a great day to buy bargain FTSE 100 shares.
If you plan to hold for 10, 20, 30, or 40 years, current uncertainty will look like a blip. The bargain stocks you buy today should offer years of capital growth and dividend income. The longer that compounds, the richer you’ll be. You could even make a million, over time.
That’s why it doesn’t matter too much if the market falls tomorrow. Or next week. Or next month. Your investment timeframe should be much, much longer than that. This is why many investors get excited about a stock market crash. It offers them another opportunity to load up on their favourite bargain FTSE 100 shares.
That doesn’t mean you should only buy shares in a crash. Nobody can time the market that way. You’ll go mad, and lose far more than you gain.
Bargain FTSE 100 shares can make you rich
The slightly boring truth is that the best time to buy shares is whenever you have the money to spare. That way you will build up your wealth, slowly and steadily. Of course, if the market has just crashed, you should seize that opportunity to buy more FTSE 100 bargains at the lower price. Just don’t sit around waiting for it.
Your long-term aim is to create a big enough portfolio to get rich and retire early. You don’t have to retire early, but it’s nice to have the choice.
Today’s a great time to plan for that, by investing in cheap FTSE 100 stocks. So was yesterday. Tomorrow offers another opportunity. Don’t waste it.
The post Forget the stock market crash! This is a great day to buy FTSE 100 stocks appeared first on The Motley Fool UK.
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Harvey Jones has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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