The FTSE 100 stock market crash may have caused many investors to doubt the index’s recovery potential. After all, major risks such as a weak economic outlook and a continued rise in coronavirus cases are present.
However, investor sentiment has often been downbeat soon after a market crash. The index, though, has always been able to recover from its variety of bear markets since its inception to produce new record highs.
As such, now could be an opportune moment to buy bargain FTSE 100 shares to improve your chances of making a million over the long run.
FTSE 100 recovery potential The FTSE 100 has experienced many declines and bear markets in its history. A common theme among them is that investor sentiment has understandably been weak in their aftermath, but the index has always gone on to recover.
At the present time, such an outcome may seem unlikely to many investors. There are, after all, significant risks facing the world economy’s prospects that could create challenging trading conditions for many large-cap shares. However, factors such as wide margins of safety currently on offer in the index, and a likely return to positive GDP growth as fiscal and monetary policy action impacts on the world economy, could lead to rising stock prices.
As such, now could be the right time to buy a diverse range of FTSE 100 shares while they offer attractive valuations. Their current prices may prove to be temporary in many cases, and could offer capital growth potential.
Accessing the FTSE 100’s recovery prospects Investors who buy FTSE 100 shares must accept that there is a realistic chance they will experience paper losses in the short run. The economy’s outlook is incredibly uncertain at the present time, and things could get worse for many businesses before they improve.
As such, it is imperative that investors have a long-term outlook when buying shares at the present time. Otherwise, they may become disappointed in a period when market volatility may be high for many months.
Similarly, it is important to invest in high-quality businesses that can overcome short-term risks to post long-term recoveries. Taking the time to assess company balance sheets and their overall strategies could be very worthwhile, and may increase your chances of generating strong returns as the FTSE 100 recovers.
Making a million from large-cap shares Making a million from buying bargain FTSE 100 shares may seem to be a distant prospect. However, the index’s past performance suggests that buying high-quality companies and holding them for the long run is a sound means of generating relatively impressive returns for your portfolio. Over time, and as the stock market recovers, you could obtain a surprisingly large portfolio that may even be valued at seven figures.
The post I’d buy bargain FTSE 100 shares ahead of the 2020 stock market recovery to make a million appeared first on The Motley Fool UK.
Peter Stephens 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