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I think the FTSE 100 crash offers a great Stocks and Shares ISA opportunity

Covid-19 is filling the news headlines, and the FTSE 100 crash is dominating the financial press. So you might have missed the start of a new Stocks and Shares ISA year.

Since 6 April, we can all invest another £20,000 in a Stocks and Shares ISA. Sure, we could invest that amount in a Cash ISA instead. But in these days of super low interest rates that don’t even match inflation, I see that as a total waste of time.

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Would a Cash ISA protect us from any further FTSE 100 crash? Maybe, but I think that would be missing the point. I view an ISA investment with a long-term horizon, ideally 10 years or more.

FTSE 100 crash protection?

To me, that makes a Stocks and Shares ISA even more attractive during a market crash.

I know very few of us have £20,000 per year to invest. But every pound of that allowance we can use is a pound that can compound over decades, tax-free. There are people who have made a million from ISA investments. And they can withdraw the full amount any time they want and not pay a penny in tax.

Now, the tax part of the equation, valuable though it is, is not sufficient on its own. What counts most is the value of the underlying investment. That’s why a Cash ISA is so bad, because the tax benefits simply do not outweigh the inflation losses. But with a Stocks and Shares ISA, you’re getting the best performing investment over the long term too.

Stock and Shares ISA

A study by Barclays has shown that, for more than a century, the UK stock market has easily outperformed other forms of investment. And that period covers many a FTSE 100 crash, including the great stock market crash of 1929.

Anyway, with all of today’s uncertainty, how should we go about it starting our 2020 Stocks and Shares ISA?

I suspect the FTSE 100 crash could continue for longer than some optimists think. But I see that as good news for buyers of shares, as it extends the bargain basement sale.

So, my 2020 plan is to drip as much cash as I can spare every month into my ISA. Easing off on investments right now and thinking I’ll get back into it when markets stabilise would, I think, be a bad move. The reason is that money I don’t commit to investments now is money that could grow into something a lot bigger in another 10 years.

Steady investments

With my dripped investment money, I’ll buy shares whenever I have a sufficient sum to make it worthwhile considering my broker’s charges. Oh, and when I see a share that I think looks good value, especially if I see it as a resilient dividend stock.

I just won’t be thinking about whether the price might fall further in the short term, because I’ve always seen attempts to time the market as a complete waste. I’ll just buy shares that I think will grow significantly higher in the long term.

And I reckon, at the end of this new ISA year, the FTSE 100 crash will have helped me accumulate some great long-term investments to fund my retirement.

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Alan Oscroft has no position in any of the shares mentioned. The Motley Fool UK has recommended Barclays. 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.