Is now a great time to buy FTSE 100 stocks to build generational wealth?

Our writer examines whether the current market volatility has led to a rare opportunity to buy quality FTSE 100 stocks.

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.

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I’ve noticed that many FTSE 100 stocks have fallen as a result of market volatility. I believe there’s an opportunity to buy quality shares at cheaper than usual prices to boost my wealth.

What’s happening with FTSE 100 stocks?

It feels like we’ve been jumping from one crisis or global event to another. I think back to the pandemic, then the post-pandemic hangover and recovery. Then more recently, unfortunate and tragic events in Ukraine and now the Middle East. When I add current macroeconomic volatility, which has been underpinned by soaring inflation and rising interest rates, it’s been a turbulent time for people and global markets.

Prior to the pandemic, I felt like FTSE 100 stocks could be on an uneasy footing due to political events in the UK, namely Brexit. I believe Brexit, although not quite on the front page of newspapers these days, is still impacting markets.

Reviewing recent events, current market volatility, and opportunities out there, I definitely believe there is an opportunity for me to buy quality stocks before a potential bull run occurs.

My approach to boosting my wealth

I’m an advocate of long-term investing! I’d buy FTSE 100 stocks to hold them for a five to 10-year period so I’m ready for some short-term turbulence.

I want to start by understanding a firm’s offering. Does the business have defensive traits, whereby its services are essential? This can help ensure stable and consistent earnings no matter the economic outlook. A prime example of a defensive stock is National Grid.

Moving on, I want to know how the business in question fits into its respective market place. Is it a market leader? Is it a start-up that could be at the mercy of other competitors? In my case, I’m looking for the former.

Next, I want to learn more about a firm’s valuation using metrics such as a price-to-earnings ratio. Are the shares cheap enough to tempt me but at the same time have prospects to head upwards once market issues cool? An example of a cheap but potentially lucrative stock is Lloyds Banking Group.

I also review past performance. I do understand that past performance is not a guarantee of the future. While I can’t look into the future, I can determine if a business has a reliable track record of performance, dividends, and share price information. Naturally, I’d be inclined to veer towards a business with a better track record than otherwise.

Finally, I want to ensure FTSE 100 stocks I buy offer me a passive income via dividends. I’m trying to ensure I’m not getting fooled by a high dividend yield. I want to buy stocks that pay consistent, stable dividends and a current balance sheet can show me the business is able to cover dividends if headwinds start to impact payouts. Of course, I’m aware dividends are never guaranteed. An example of a good dividend stock is British American Tobacco.

To conclude, I’m a huge advocate of doing lots of research to make informed decisions. I’m planning on buying some quality FTSE 100 stocks using my approach to capitalise on the current volatility.

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.

Sumayya Mansoor has no position in any of the shares mentioned. The Motley Fool UK has recommended British American Tobacco P.l.c. and Lloyds Banking Group Plc. 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.

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