At the Motley Fool, we like to remind readers that a stock market crash is an opportunity, not a threat. It is a great chance to buy your favourite FTSE 100 shares at reduced prices.
Your aim should be to hold them for the long-term, which means retirement and beyond. If you stick at it, you could eventually build a £1m portfolio. All your capital growth and income will be free of tax, if you buy inside a Stocks and Shares ISA.
The stock market is still down 20% since the Covid-19 crash. I’d consider taking advantage by splitting £5k between these two FTSE 100 shares.
Legal & General Group (LSE: LGEN) was sold off in the stock market crash in March, along with almost every other FTSE 100 company. Given its large asset management business, it will always struggle in a crash. However, the L&G share price has recovered steadily since, helped by its strong balance sheet and healthy solvency.
I’d buy these FTSE 100 stocks
Last month L&G announced further strengthening, issuing convertible debt to take advantage of low bond yields, and to gear up for an investment-led Covid-19 recovery. The group continues to stand by its dividend, even though others, notably rival Aviva, suspended theirs. Management said it can afford to make shareholder payments as it sees fit, which I find encouraging.
Legal & General is a big, solid business, with a fast-growing annuity portfolio now worth £76.9bn, as it continues to take on the risk of running company pension schemes. While its investment management arm, LGIM, saw external net flows of £11.2bn during the stock market crash, it still boasts a hefty £1,233bn of assets under management.
Now could be a good time to buy Legal & General, as it trades at a bargain price of around 7.21 times earnings. The yield is currently 7.91%, manna in these troubled times.
The housebuilding sector crashed after the shock Brexit referendum result and again due to Covid-19. Yet I think the stock market has been unfair to it, and companies such as Taylor Wimpey (LSE: TW) should continue to benefit from property supply shortages. Basically, the country cannot build enough houses to keep up with demand.
Stock market crash bargains
Chancellor Rishi Sunak’s stamp duty holiday should help maintain that demand over the months ahead, and offset any jump in unemployment when furlough schemes end in October. Keeping the property market bubbling is clearly still a priority for politicians.
The pandemic may even work in favour of housebuilders, as the government relaxes planning restrictions for new builds and considers extending the help to buy scheme beyond March 2023.
Last month, Taylor Wimpey raised £522m by issuing new shares equal to 11% of its market cap, to buy land at today’s reduced prices. It reckons there are great opportunities out there right now. There is no dividend for now, but that will surely change.
It you will need more than two stocks to make a million in your portfolio. However, these two could push you a little further in the right direction.
The post Stock market crash: I’d invest £5k in these 2 FTSE 100 shares in an ISA appeared first on The Motley Fool UK.
- Stock market crash: I’d listen to Warren Buffett and buy cheap UK shares to make a million
- Stock market crash: I’d invest £5k in these 2 UK shares in an ISA today to make a million
- Stock market crash: 3 cheap UK shares I’d buy today to make a million!
- 3 shares I'd buy and hold for the next decade for dividend income
- Will Lloyds’ share price ever go back up to 60p?
- Top shares for 2020
Views expressed 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