We all dream we could make a million, one way or another. Win the lottery, build a business, become a Premier League footballer. These are just some of the options. But sadly, they’ll be out of reach for most of us.
Making a million from investing is doable though, and you don’t need special skills. What you do need is application and time. Nobody becomes a stocks and shares millionaire overnight (except through an inheritance).
If you invest regular sums in the stock market over your working lifetime you really can do it. Especially if you take advantage of a stock market crash like this one. It allows you to buy cheap FTSE 100 shares at bargain prices, as more short-sighted investors sell up and run for cover.
You really can make a million with shares
Once you’ve bought them, you can sit back and wait for your wealth to grow over the long term. It will help massively if you reinvest all the dividends you generate for growth as well. This year’s crash is therefore a once-in-a-lifetime opportunity. It’s the biggest in 12 years. Who knows when we will get another on this scale.
You can’t afford to waste this one. If you want to make a million, which is an ambitious plan, you have to grab every opportunity that comes along.
The Covid-19 crash is unprecedented for many reasons. We’ve never experimented by locking down most of the economy, not to mention the population. Nor have we seen such a rapid plunge into recession. It was the fastest share price crash in history too, by some measures.
But bear markets are nothing to fear. They can set you on the road to make a million.
The crash has also generated a once-in-a-lifetime response from governments and central bankers. Total fiscal and monetary stimulus now runs into trillions of dollars. This is likely to wash into share prices, and drive markets higher once we all start working, shopping, and travelling again.
Use your Stocks and Shares ISA allowance
Although the FTSE 100 recovered in April and May, it’s still trading 20% below its January peak. This means you still have a chance to grab FTSE 100 shares at dirt-cheap prices. You need to do this repeatedly, whenever markets are down.
You can make a million with an average investment of £500 a month. If you generated an average annual total return of 6.5% a year, after charges, you would have £1.12m after 40 years. Invest more, and you can make that million faster.
Loads of FTSE 100 stocks are trading at bargain valuations today, thanks to the crash. Anybody looking to make a million should be hunting through them for once-in-a-lifetime buying opportunities. Look for companies with strong balance sheets, loyal customers, competitive moats against rivals, and minimal debt.
They’ll be best-placed to thrive in the recovery, and put you on course to making a million.
The post A stock market crash is your once-in-a-lifetime opportunity to make a million on the FTSE 100 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