When stock market crashes happen, it can be tempting for investors to pull up the drawbridge. No-one likes to see the value of their cash disappear down the plughole. And so sticking your savings into something like a Cash ISA instead of buying UK shares can be seen as an attractive option for many.
I can understand this line of thinking, but it’s not one that I myself believe in. It’s because history shows us that UK share indices always recover strongly from stock market crashes. What’s more, those that buy stocks at low cost after a crash can get seriously rich in the subsequent years as share prices rebound.
Over the long term, investors enjoy an average annual return of between 8% and 10%. It’s proof positive that stock market crashes are no barrier to you and I making terrific returns on our extra cash. So while no-one appreciates watching the value of their investments fall heavily, it’s worth remembering that in most cases these drops are only fleeting.
2 FTSE 100 shares I’m looking at
As I say, those that wish to supercharge the money they make from UK shares will buy after stock market crashes. This is when quality shares can be picked up at maximum value. And it’s how hundreds of Stocks and Shares ISA investors became millionaires during the economic upturn that followed the 2008/09 market crash.
I’d like to talk you through two cheap UK shares from the FTSE 100 that are on my radar. I reckon they could soar in value as the global economic recovery clicks through the gears:
- Spending on life insurance products tends to suffer during tough economic times. However, sales of financial products like these are some of the fastest to recover during the following upturn. This is why I believe RSA Insurance Group, which has fallen 20% since the start of 2020, is a great buy today. A low forward P/E ratio of 11 times certainly leaves scope for some meaty share price gains before long.
- Demand for Hargreaves Lansdown’s services has surged in recent years as savers, punished by poor interest rates on traditional savings products, have sought to get a decent return elsewhere. More Bank of England rate cuts in 2020 mean that these people will continue to look to financial services providers like Hargreaves Lansdown to help them with their money. And they will have more cash in their pockets to invest with as the economic cycle improves too.
Want to make serious money with UK shares?
So what are you waiting for? In my opinion the 2020 stock market crash provides a rare opportunity to supercharge the returns UK share investors can make during the inevitable economic upturn. And The Motley Fool, with its epic library of special reports, can help you make the most of this chance.
Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended Hargreaves Lansdown. 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.