Stock market crash round 2 is your opportunity to make a million for retirement

There’s a chance we’re heading for another stock market crash. If you want to make a million for your retirement, be ready to take advantage.

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

The stock market crash in March was a real shocker. The FTSE 100 fell by a third, bottoming out at just below 5,000 on 23 March.

At the height of the turmoil, many investors panicked. Fearing shares would fall even further, they sold everything they possibly could.

That’s a natural human reaction, but a disastrous mistake for an investor. A stock market crash isn’t the time to sell shares. It’s the time to buy. If you want to build a million-pound portfolio for your retirement, you need to stay invested at times like these.

As famed investor John Templeton said: “Don’t panic. The time to sell is before the crash, not after.”

To make a million, you shouldn’t sell even before a crash either. You should stay invested until the time comes when you need to generate retirement income from your portfolio.

Stock market crash opportunity

Revising Templeton’s quote, I’d say the best time to buy shares is after the crash. Or right in the middle of it. That way you can pick up your favourite companies at dramatically reduced prices. Then simply hang on for the recovery. It’ll come. All you have to do is be patient, while reinvesting all your dividends for growth.

If that worries you, remember this quote from George Soros: “The worse a situation becomes, the less it takes to turn it around, the bigger the upside.”

There was a lot of upside on 23 March. The FTSE 100 rose about 30% in the subsequent recovery. If you missed the opportunity to buy shares in the March stock market crash, you may soon have a second chance.

The scary thing is that Covid-19 hasn’t been defeated. Worldwide, it’s killed more than half a million in just seven months. The number of cases now tops 12m. Some people worry about a second wave. Others point out that the first wave isn’t over yet.

Start searching the FTSE 100 today

As I write this, the FTSE 100 is slipping back towards 6,000. It’s now more than 20% below its mid-January peak of 7,674. That means you already have a buying opportunity today. A second round of the stock market crash would give you an even better one.

Don’t fear the next crash. Instead, make maximum use of it. Start scanning the FTSE 100 and FTSE 250 for buying opportunities. Brave, contrarian investors may want to use the bear market to take a punt on ravaged industries, such as travel and tourism. Personally, I wouldn’t do that now.

I would target solid companies with strong balance sheets, loyal customers, minimal debt, and a clear route out of the crisis. Positive dividend prospects would also help.

There’s no getting away from it. Stock market crash round-two could be brutal. It could also be a massive contrarian buying opportunity. If you’re investing to make a million-pound portfolio, get ready to seize the moment.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

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.

More on Investing Articles

Young Asian woman holding a cup of takeaway coffee and folders containing paperwork, on her way into the office
Investing Articles

How I could make a 10% yield for high passive income a reality

Jon Smith explains how he can target high passive income from top-yielding stocks, including one specific example he'd consider.

Read more »

Investing Articles

I’d buy 1,784 shares of this FTSE 100 stock to target £350 of monthly passive income

Muhammad Cheema takes a look at how British American Tobacco shares, with a dividend yield of 10.1%, can generate a…

Read more »

White female supervisor working at an oil rig
Investing Articles

1 ex-FTSE 100 stock that I think will get promoted soon

Jon Smith flags up an energy stock that used to be in the FTSE 100 and currently has strong momentum…

Read more »

Shot of a young Black woman doing some paperwork in a modern office
Investing Articles

With an 8% dividend yield, I think this undervalued FTSE stock is a no-brainer buy

With an impressive yield and good track record of payments, Mark David Hartley is considering adding this promising FTSE share…

Read more »

Passive income text with pin graph chart on business table
Investing Articles

£9,500 in savings? Here’s how I’d try to turn that into £1,809 a month of passive income

Investing a relatively small amount into high-yielding stocks and reinvesting the dividends paid can generate significant passive income over time.

Read more »

Businesswoman analyses profitability of working company with digital virtual screen
Investing Articles

Dividend star Legal & General’s share price is still marked down, so should I buy more?

Legal & General’s share price looks very undervalued against its peers. But it pays an 8%+ dividend yield, and has…

Read more »

Investing Articles

Dividend shares: 1 FTSE 100 stock to consider buying for chunky shareholder income

This company’s ‘clean’ dividend record looks attractive to me and I’d consider buying some of the shares to hold long…

Read more »

Investing Articles

3 of my top FTSE 250 stocks to consider buying before April

Buying undervalued UK shares can be a great way to generate long-term wealth. Here, Royston Wild reveals a handful on…

Read more »