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Don’t waste the stock market crash! I’d open an ISA and buy FTSE 250 shares today

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Now may not seem like the best time to open a Stocks and Shares ISA to buy FTSE 250 shares. As the recent market crash showed, the coronavirus crisis means the index faces a prolonged period of uncertainty.

However, buying shares at low levels has historically generated handsome returns for investors over the long term.

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With a Stocks and Shares ISA also offering tax benefits, simplicity and low costs, now could be the right time to take advantage of the FTSE 250’s low level and long-term potential.

ISA tax benefits

Using a Stocks and Shares ISA to invest in the stock market has many advantages.

Most online stock brokers offer one of these accounts, and they are little different to an average dealing account. However, they come with significant tax advantages.

For example, no capital gains or dividend tax is charged on profits earned within one of these wrappers. You can also withdraw the funds whenever you like.

As such, using a Stocks and Shares ISA to invest could considerably improve your financial prospects over the long run, especially if you have a lot of financial investments.

FTSE 250 opportunities

One of the best places to invest your money right now could be the FTSE 250. The mid-cap index is made up of some of the fastest-growing companies in the UK.

While many of these businesses face an uncertain future, others are faring well in the current environment. There’s a good chance these businesses will recover quickly when the coronavirus crisis passes.

However, many FTSE 250 constituents will continue to experience a highly challenging period that could realistically last for many more months. With this being the case, buying FTSE 250 stocks today could lead to paper losses over the short run.

But over the long run, it is very likely that FTSE 250 stocks could generate high returns for investors. Many of the index’s members currently trade on exceptionally low valuations. This is true of companies that are suffering in the crisis, as well as those that have a brighter outlook.

Therefore, some stocks appear to offer a wide margin of safety at current levels. This suggests they could produce attractive returns for investors over the long run.

Diversification

Nevertheless, with so much uncertainty stalking the global economy, it might be best to own a selection of FTSE 250 growth stocks. This would decrease your risk to any particular sector and industry, and improve your chances of achieving an attractive return on assets over the long term. Buying a portfolio of FTSE 250 shares in a Stocks and Shares ISA would also reduce tax liabilities.

This could allow you to benefit from the growth potential of these businesses without having to worry about receiving a large tax bill when you decide to sell.

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Rupert Hargreaves 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.

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