Here’s how a stock market crash could help you retire years earlier

A stock market crash is quite unpleasant – but for the well-prepared investor, it’s a rare and wonderful opportunity to accelerate their wealth.

| More on:

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.

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.

Image source: Getty Images

With fears of a looming economic slowdown or even a full-blown recession on the rise, predictions of a new stock market crash in 2026 have once again started to emerge.

It goes without saying that a crash isn’t a particularly pleasant experience, especially for those going through it for the first time. However, with the right strategy, investors can use the volatility to propel their portfolios to record highs and drastically expand their wealth. Here’s how.

Volatility creates opportunity

Let’s assume the worst and say the stock market suddenly falls 20% next week as investors start to panic about the geopolitical and economic climate, selling off their stocks. As a consequence, index fund investors see a large chunk of their portfolios get wiped out quickly while stock pickers likely endure even more volatility with some of their stronger growth positions falling more than 50%.

While not a market crash, that’s precisely what happened during the 2022 US market correction, with growth stocks like Amazon (NASDAQ:AMZN) falling by 55% over the space of a year.

Uncertainty about inflation, combined with a rapid rise in interest rates and a cost-of-living crisis, hit businesses across the board four years ago. And while the catalysts for a potential crash in 2026 are different (tariff inflation, supply chain disruptions, rising unemployment and steep valuations), it would nonetheless create a similar long-term opportunity.

Instead of recognising that Amazon’s long-term strategy and growth potential weren’t compromised by temporary macroeconomic uncertainty, most investors rushed for the exits and sold their Amazon shares.

Yet the intelligent long-term investors who recognised the bargain that the market volatility had created scrambled to buy Amazon shares while everyone else was selling. The result? Since December 2022, Amazon shares have almost tripled as the economies started recovering.

As Amazon demonstrates, while scary, capitalising on these rare and wonderful buying opportunities opens the door to fantastic market-beating returns. And more importantly, it accelerates the wealth-building process, allowing some investors to potentially retire much earlier.

Still worth considering in 2026?

As we enter 2026, Amazon shares are once again looking a bit frothy with a price-to-earning ratio of 35. That’s certainly not as high as it was back in late 2021, but it does open the door to elevated volatility if something goes wrong. And there are a few potential weak spots for investors to dig into.

A big concern is the group’s aggressive capital expenditure plans for upgrading and rolling out new data centres and AI infrastructure. For the time being, AI demand’s proving to be a handy tailwind for its hyperscaler services.

But if companies begin pulling back on AI initiatives due to a lack of tangible value creation, Amazon could end up with capacity underutilisation issues.

As for the e-commerce side of the business, a slowdown in consumer spending equally doesn’t bode well. And we’ve already seen some weakness start to creep in, with its July and October 2025 Prime Day sales failing to meet expectations.

Nevertheless, the latest results show encouraging momentum for its data centre arm, and its long-term e-commerce trajectory still looking strong, Amazon shares could definitely be worth a closer look. Especially if the stock market does indeed decide to throw a tantrum later this year.

Zaven Boyrazian has no position in any of the shares mentioned. The Motley Fool UK has recommended Amazon. 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

Calendar showing the date of 5th April on desk in a house
Investing Articles

Investors are rushing to buy these before the Stocks and Shares ISA deadline. Should we join in?

Despite geopolitical troubles causing so much pain in the world, Stocks and Shares ISA investors in the UK are keeping…

Read more »

Mature friends at a dinner party
Investing Articles

How much do you need in a Stocks and Shares ISA for a £10,000 second income?

Ben McPoland highlights a FTSE 100 dividend stock yielding 7% that could contribute nicely to an ISA generating a second…

Read more »

Close-up of a woman holding modern polymer ten, twenty and fifty pound notes.
Investing Articles

How big a Stocks and Shares ISA is needed to target £500 of monthly passive income?

Christopher Ruane explains how a Stocks and Shares ISA could potentially earn someone thousands of pounds in dividends per year.

Read more »

British pound data
Investing Articles

With the stock market down, here are 2 potential ISA bargains to consider right now

When the stock market dips, investors looking at long-term prospects should seek out cheap shares, right? I have my eye…

Read more »

Mature black woman at home texting on her cell phone while sitting on the couch
Investing Articles

Want a £1m Stocks and Shares ISA? Step 1 starts before 5 April

Dr James Fox explains why the Stocks and Shares ISA is an incredible vehicle, and why investors may want to…

Read more »

Happy woman commuting on a train and checking her mobile phone while using headphones
Investing Articles

2 dirt-cheap stocks to consider buying for an ISA portfolio in April

This pair of UK shares are down by double digits in recent months. Ben McPoland sees both as stocks to…

Read more »

Front view photo of a woman using digital tablet in London
Growth Shares

I think this undervalued penny stock has serious potential to outperform

Jon Smith points out a penny stock that's started to rise as the company pushes ahead with a transformation that…

Read more »

Close-up of children holding a planet at the beach
Investing Articles

2 dividend-paying investment trusts to consider for a Stocks and Shares ISA

These two London-listed funds source their dividends globally, offering income investors diversification inside an ISA portfolio.

Read more »