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Why I’d buy cheap UK shares today to make a million from the FTSE 100 stock market crash

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The FTSE 100 stock market crash has caused a wide range of UK shares to trade at low prices. In some cases, they are deserved due to highly challenging operating conditions and weak financial positions. However, other large-cap shares have solid balance sheets and sound growth outlooks that could make them attractive buys for long-term investors.

Through using the index’s cyclicality to your advantage, and building a diverse portfolio of high-quality companies, you could increase your chances of making a million from the stock market crash of 2020.

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An uncertain FTSE 100 future

The FTSE 100 may have rebounded from its lowest point of just under 5,000 points over the last few months, but it continues to trade around 15% down on its 2020 starting price. This suggests that investors are anticipating an uncertain future for the index, which may come to fruition as a result of risks such as a weak economic outlook being present.

Therefore, investors who buy shares today may experience paper losses in the short run. The index itself may experience a high degree of volatility as investor sentiment could quickly shift from positive to negative, and vice-versa, depending on news flow.

Buying opportunities

Such a situation is relatively common for FTSE 100 shares. Even if the economic outlook is positive, as it was earlier this year, exceptional circumstances can arise that lead to falling stock prices and paper losses for investors.

However, those circumstances have never lasted in perpetuity. In other words, the stock market has a strong track record of not only recovering from its downturns, but also in delivering new record highs that can offer strong returns for those investors who buy stocks while they are trading at low prices.

Furthermore, many UK shares currently have solid financial positions and long-term growth potential. They are likely to survive a period of weaker sales due to their large cash balances and access to liquidity. They may even be able to build a more solid competitive position to increase their market dominance.

However, due to weak sentiment towards the FTSE 100 they trade at low prices at the present time. Therefore, buying them today could be a sound move for any investor who is seeking to generate high returns over the coming years.

Making a million

The FTSE 100’s annualised returns of 8% since its inception in 1984 suggest that it offers a sound means of building a seven-figure portfolio over the long run.

However, the returns available to investors who buy while the index offers a margin of safety could be much higher than those of the wider market. The additional short-term risks currently present could offer buying opportunities for UK shares that increase your chances of making high returns, and even a £1m+ portfolio, over the long term.

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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.

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