Who wouldn’t like to retire a millionaire? Aside from billionaire status, that is. It would make your later years far more pleasurable, to have a decent retirement pot to fall back on.
It’s possible for ordinary investors to build a million-pound retirement fund, if they start early enough and stick with it. Now could be a good time to accelerate your efforts, by investing in cheap FTSE 100 shares. After the stock market crash, there are plenty to choose from.
Even if you don’t manage to retire a millionaire, you will be a a better position than if you never tried. Investing even relatively small amounts in a tax-free Stocks and Shares ISA is always better than investing nothing at all.
FTSE 100 stocks going cheap
It may not seem like it, but now’s a good time to get started. The stock market crash has frightened many investors, but it’s also thrown up plenty of opportunities. Many top FTSE 100 stocks are now trading at cheap valuations, by historical standards.
There are good reasons for that, as the world slips into recession. Companies in some sectors will struggle to recover, even after the UK edges out of lockdown. Others will fly out of the traps though, and could be stronger than before.
There will be consolidation in some industries, and financially-strong companies will thrive as weaker competitors flounder. Some will even look to acquire rivals on the cheap. They will take advantage of this buying opportunity, and you should too.
You can retire a millionaire
Naturally, we don’t know how deep the recession is going to be, and how long it will last. But history shows investors who took the plunge and bought shares in previous recessions did well when markets recovered.
Also, we’ve seen share prices decouple from the wider economy. That’s because the world’s central bankers have effectively backstopped the market with trillions of dollars worth of stimulus. As that money flows into the market, share prices could fly.
Some of you may be tempted to wait until the picture is clearer. I wouldn’t recommend that. As we saw after the lows of 23 March, when markets rebound after a crash, they move upwards swiftly. If you try to time your entry point, you’ll almost certainly miss that early surge.
Those who are planning to retire a millionaire need to show a bit of pluck and buy FTSE 100 shares when they’re down. Personally, I would target companies with strong balance sheets, loyal customers, steady revenues, high barriers to entry, and plenty of net cash. That should see them through current troubles, and put them in a strong position for the recovery.
The next leg of the stock market recovery could arrive faster than you think. By investing before it comes, you can take another step on the road to a million pound retirement.
This is where I'd start.
Markets around the world are reeling from the coronavirus pandemic…
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Harvey Jones 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.