The Motley Fool

I’d buy cheap FTSE 100 shares in this stock market crash to become an ISA millionaire!

Image source: Getty Images

Buying FTSE 100 stocks following the recent market crash could improve your ISA returns over the long run. Certainly, there are significant risks present due to vast swathes of the economy being shut down. But over the long run, the FTSE 100 could experience a strong recovery that lifts the prices of your holdings.

As such, now could be the right time to adopt a long-term focus and buy high-quality FTSE 100 shares. Doing so could increase your chances of becoming an ISA millionaire.

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...

Margin of safety

Buying shares while they offer a wide margin of safety could enhance your long-term returns. A margin of safety is present where a company’s shares trade for less than they are worth. And investors are likely to benefit from a more favourable risk/reward opportunity as a result.

At the present time, the FTSE 100 is trading significantly below its record high. Many of its members have valuations that are unusually low. Such valuations are often only available during bear markets. Of course, they may experience further share price declines that make them even more attractive over the near term. But over the long term, it seems likely that many of the FTSE 100’s incumbents have the capacity to deliver strong capital growth as the economy recovers.

Past performance

Of course, it is near-impossible to predict the prospects for the FTSE 100 over a matter of months. But its long-term performance may mirror its track record to some extent. In other words, the index has a history of cyclicality, with investors having overreacted to bull markets and to bear markets on a number of occasions. This has caused share prices to be mispriced at times. But this provides opportunities for long-term investors to buy at a low price and sell at a high price.

At the present time, investor sentiment is weak. Although the FTSE 100 has shown signs of a rebound in recent weeks, investors are pricing in a challenging period for the global economy. This could provide an opportunity for long-term ISA investors to buy companies that are likely to survive the short-term difficulties facing the world economy. They may be in a strong position to benefit from a global economic recovery over the coming years, which could boost your portfolio’s returns.

Risk management

Clearly, there are risks attached to buying shares following a market crash. The FTSE 100 could experience further falls in the near term. And the prospects regarding coronavirus and its impact on the economy are impossible to accurately predict.

However, investors who are seeking to build a seven-figure ISA over the long run could benefit from buying undervalued shares today. The past performance of the FTSE 100 suggests just that. Buying while investor sentiment is weak can lead to impressive returns in the long term as the market moves into a more bullish phase following its 2020 bear market.

“This Stock Could Be Like Buying Amazon in 1997”

I'm sure you'll agree that's quite the statement from Motley Fool Co-Founder Tom Gardner.

But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.

What's more, we firmly believe there's still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.

And right now, we're giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool.

Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge!

Peter Stephens has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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.

Where to invest £1,000 right now

Renowned stock-picker Mark Rogers and his select team of expert analysts at The Motley Fool UK have just revealed 6 "Best Buy" shares that they believe UK investors should consider buying NOW.

So if you’re looking for more top stock ideas to try and best position your portfolio in this market, then I have some good news for your today -- because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply enter your email address below to discover how you can take advantage of this.

I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement.