Making a million by investing money in UK shares has been a popular pursuit for many years. Although it will take time to build a seven-figure portfolio, obtaining the stock market’s high-single digit annual returns on a regular basis could turn a modest monthly investment into a seven-figure portfolio.
For example, assuming the same 9% annual total returns delivered by the FTSE 100 since inception in 1984 would turn a £500 monthly investment into a million in just over 30 years.
Of course, it is possible to generate higher returns than the wider stock market over the long run. Here are five shares that could offer impressive returns that help an investor to build a seven-figure portfolio.
Long-term growth opportunities among UK shares
While many UK shares are experiencing tough operating outlooks at the present time, their business models could be a good fit for the economy’s future prospects. For example, online-focused companies such as Rightmove and Auto Trader could benefit from the increasing popularity of using mobiles and laptops to search for various products, including property and cars.
Clearly, they are experiencing significant challenges in the short run due to coronavirus restrictions. However, they appear to have solid financial positions and have sought to help their partners in recent months. This could also provide additional goodwill as the economy recovers, while their dominant market positions may lead to resilient sales and earnings growth in the coming years.
Recovery opportunities after the stock market crash
Other UK shares could offer strong recovery potential after the 2020 stock market crash. Certainly, in the short run they may experience further difficulties due to a weak economic outlook. However, financially-sound businesses with dominant market positions may stand a good chance of ultimately recovering.
As such, banking shares such as Lloyds and Barclays could offer investment appeal at the present time. They have improved their financial positions in the past decade, and have been able to make inroads into cost reductions to improve their efficiency. While low interest rates may not provide optimal operating conditions over the coming months, the price declines of banking shares could factor this in.
Defensive growth opportunities
AstraZeneca could also deliver impressive returns relative to other UK shares. The company has defensive characteristics that have been a key reason for its resilient financial performance since the start of the current crisis. It also has long-term growth potential as the world population ages and increases in size. This may catalyse its financial performance in the coming years.
Through buying companies such as those mentioned above within a diverse portfolio of shares, it is possible to generate relatively high returns. Over time, they could cause a portfolio to reach seven-figure status at a faster pace than if it was invested in an index fund.
The post Top stocks for 2021! 5 UK shares I think could help me to make a million appeared first on The Motley Fool UK.
Peter Stephens owns shares of AstraZeneca, Barclays, and Lloyds Banking Group. The Motley Fool UK has recommended Auto Trader, Barclays, Lloyds Banking Group, and Rightmove. 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 2021