Investing £2k, or any other amount, in FTSE 100 shares today could lead to strong gains in the long run. Some of the index’s members have reported relatively robust financial performance despite obvious economic uncertainty. Other members appear to have the financial strength to overcome short-term risks to return to encouraging growth in the coming years.
As such, now could be the right time to buy a range of FTSE 100 shares while they offer wide margins of safety. Following this strategy could lead to high returns in the long run that improve your financial prospects.
The economic impact of coronavirus is likely to be significant. Some businesses, though, have reported there’s been no material financial impact from the pandemic. They include some consumer goods companies, healthcare stocks and businesses with online operations that have been able to adapt to changing consumer spending habits.
Other FTSE 100 companies, meanwhile, have experienced a decline in sales and profitability that could last for many months. However, in many cases, they appear to have modest debt levels and access to enough cash to see them through the current crisis. This could mean they’re able to resume their previous levels of profitability over the coming years, which could catalyse their stock prices.
Attractive FTSE 100 buying opportunities
Many companies with long-term growth potential trade on low valuations. In some cases those valuations are merited. That’s because they face very difficult outlooks. But in other cases stocks have suffered from increased risk aversion among investors. This has led to the FTSE 100 as a whole trading on a relatively low valuation as investors have flocked to less risky assets. This could present an opportunity for long-term investors to purchase high-quality growth stocks while they trade at a low ebb.
Although a recovery for the index is by no means guaranteed, it seems to be highly likely. The FTSE 100 has rebounded successfully from each of its past bear markets. Therefore, a sustained growth period is likely to occur over the coming years – especially with fiscal and monetary policy stimulus likely to support asset prices over the long term.
Buying shares today
Clearly, there are risks ahead for investors from an uncertain economic outlook. News regarding coronavirus could worsen in the short run and may cause paper losses for investors. Therefore, it is imperative to allow your holdings the time they need to produce strong growth, which could mean investing for many years.
However, with low valuations on offer across high-quality FTSE 100 growth shares, now could be a worthwhile buying opportunity. The index’s track record of growth suggests that it offers significant recovery potential after what has been one of the fastest and most severe market crashes of all time.
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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.