I’d buy cheap FTSE 100 shares today to try and become an ISA millionaire!

Stock market corrections and bear markets are the perfect time to load up on FTSE 100 shares at bargain prices on the journey to a £1m ISA.

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.

Young woman working at modern office. Technical price graph and indicator, red and green candlestick chart and stock trading computer screen background.

Image source: Getty Images

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.

Despite the FTSE 100 making an impressive comeback from the 2022 stock market correction, there continues to be plenty of cheap shares to choose from. The index overall is actually now trading near record highs.

Yet, not every constituent has recovered from the manic selling last year. And that may have provided a rare opportunity for investors to kick-start their journey toward becoming an ISA millionaire.

As bonkers as it may sound, investing just £500 a month over the long term is theoretically enough to build a £1m Stocks and Shares ISA. In fact, plenty of people have already done it, securing financial independence in the process.

Using the Footsie to get richer

We’re currently living in a pretty uncertain economic environment. Sure, inflation has started to come down, but the risk of a recession hasn’t gone away. And it undoubtedly takes some courage to start putting money into the stock market.

However, that’s been the situation in every bear market. And while the short-term situation can be a volatile experience, the long-term shows a recurring trend. Investing in bear markets is how fortunes are made.

Some of the best-performing years of the FTSE 100 and other leading stock market indices directly followed after a severe downturn. And capitalising on this eventual upward momentum can drastically accelerate the wealth-building process.

That’s why, despite all the extreme crashes and declines throughout history, the UK’s flagship index has delivered an average annual return of around 8%. That’s considerably more than any savings account can muster. And by replicating this performance with something as simple as a low-cost index fund, investing £500 a month can transform into a £1m portfolio within 34 years.

Investing has its risks

The FTSE 100 contains the largest 100 companies in order of market-cap on the London Stock Exchange. But even Britain’s biggest businesses have their threats. Suppose the UK falls into a deep recession? In that case, as consumer spending declines further, corporate earnings are set to be in for quite a tumble.

With tightening cash flows, dividends are likely to suffer, as are share prices. And the recent stock market rally could end up reversing in the short-term. However, there’s a glimmer of hope. Just a few days ago, the Bank of England revised its outlook upward on the back of improving economic conditions. As such, the current upward momentum may be set to continue.

Regardless, near-term uncertainty remains high. But when taking a long-term perspective, the future of the FTSE 100 looks bright. After all, the index has a perfect track record of recovery from even the most dire economic disasters.

Of course, an 8% annual return can’t be guaranteed and any investment could generate less, or even lose money. But I believe it’s likely that capitalising on cheap valuations today could result in impressive wealth generation further down the line.

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.

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

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 »

Smiling young man sitting in cafe and checking messages, with his laptop in front of him.
Investing Articles

3 things that could push the Lloyds share price to 60p and beyond

The Lloyds share price has broken through 50p. Next step 60p? And then what? Here are some thoughts on what…

Read more »

Young female business analyst looking at a graph chart while working from home
Investing Articles

£1,000 in Rolls-Royce shares a year ago would be worth this much now

Rolls-Royce shares have posted one of the best stock market gains of the past 12 months. But what might the…

Read more »