Forget a Cash ISA! I’d buy FTSE 100 growth shares right now to make a million

I think the FTSE 100 (INDEXFTSE:UKX) could offer impressive growth potential at its current price level.

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

While living within your means is a great way to improve your financial future, investing your hard-earned cash in FTSE 100 shares could do likewise.

In fact, with interest rates forecast to stay at low levels over the medium term, the difference in returns between Cash ISAs and FTSE 100 shares may widen.

That’s especially the case since the FTSE 100 appears to offer good value for money at the present time, as well as growth potential.

As such, now could be the right time to switch from a Cash ISA to a diverse range of FTSE 100 stocks to boost your chances of making a million.

Cash ISA returns

At the present time, holding your spare capital in a Cash ISA is unlikely to yield a high return. The best you can hope for is around 1.5%, which is below the rate of inflation. This means that over time, the spending power of your capital is likely to decline.

This situation may remain in place over the coming years. Recent updates from the Bank of England have shown that they appear to favour a loose monetary policy to support the economy. A low rate of inflation makes interest rate rises even less likely, which is bad news for savers.

FTSE 100 growth potential

By contrast, the growth potential for the FTSE 100 seems to be high at the present time. Certainly, developed economies around the world are struggling to post strong growth rates, but emerging markets such as China and India are delivering high GDP growth rates that could mean the FTSE 100’s international exposure is a boon for investors.

Additionally, the index’s members appear to trade on valuations that are below their historic averages in many cases. This signifies that there is scope for investor sentiment to improve significantly over the coming years should economic risks fail to fully materialise.

Buying opportunity

Those economic risks, such as a global trade war, Brexit uncertainty and a slowing eurozone economy, may mean that there is a risk of capital loss in the short run for investors in shares. However, they could present improved buying opportunities for long-term investors who are able to live with a period of uncertainty.

In fact, history shows that the most profitable times to buy shares are when there are risks facing the world economy. Obtaining a diverse range of companies at such times can lead to an improved risk/reward ratio for investors, since they are able to buy high-quality stocks while they trade at wider discounts to their intrinsic values.

Therefore, while a Cash ISA may seem to be a safer investment at the present time, FTSE 100 stocks may improve your chances of generating high returns. Over the long run, this could lead to a seven-figure portfolio that significantly improves your financial future.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

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.

More on Investing Articles

Illustration of flames over a black background
Investing Articles

2 red-hot UK growth stocks to consider buying in April

These two growth stocks are performing well, but can they continue to deliver for investors through 2024 and beyond?

Read more »

Charticle

Is JD Sports Fashion one of the FTSE 100’s best value stocks? Here’s what the charts say!

The JD Sports Fashion share price remains a wild ride during the first quarter. Could it be one of the…

Read more »

Investing Articles

Could the JD Sports Fashion share price double in the next five years?

The JD Sports Fashion share price has nearly halved in the past five years. Our writer thinks a proven business…

Read more »

Bus waiting in front of the London Stock Exchange on a sunny day.
Investing Articles

If interest rate cuts are coming, I think these UK growth stocks could soar!

Falling interest could be great news for UK growth stocks, especially those that have been under the cosh recently. Paul…

Read more »

Investing Articles

Are these the best stocks to buy on the FTSE right now?

With the UK stock market on the way to hitting new highs, this Fool is considering which are the best…

Read more »

Petrochemical engineer working at night with digital tablet inside oil and gas refinery plant
Investing Articles

Can the Centrica dividend keep on growing?

Christopher Ruane considers some positive factors that might see continued growth in the Centrica dividend -- as well as some…

Read more »

Smiling family of four enjoying breakfast at sunrise while camping
Investing Articles

How I’d turn my £12,000 of savings into passive income of £1,275 a month

This Fool is considering a strategy that he believes can help him achieve a stable passive income stream with a…

Read more »

Person holding magnifying glass over important document, reading the small print
Investing Articles

2 top FTSE 250 investment trusts trading at attractive discounts!

This pair of discounted FTSE 250 trusts appear to be on sale right now. Here's why I'd scoop up their…

Read more »