The 2020 stock market crash has created a once-in-an-age opportunity to get seriously rich with UK shares.
Not since the 2008/09 banking crisis have you and I had a chance to buy quality UK shares at bombed-out prices. We can buy today and watch them soar in value as market confidence steadily recovers, and eventually sell at a huge mark-up to what we originally paid for them. It’s a strategy that turbocharged the number of Stocks and Shares ISA millionaires over the past decade.
Defending yourself with UK shares
Stock market crashes are unnerving things for investors. But you don’t have to put your financial health in peril in order to try and make a million with UK shares. By investing just £50 a week, a 25-year-old could make a whopping £1.2m by the time they retire at 65 (which means they’d be able to retire before the State Pension age). That’s based on evidence showing that long-term investors can make an average return of up to 10% a year.
If you’re still worried about a fresh stock market crash you can take steps to limit your risk. You can buy UK shares like utilities, food producers, non-life insurance suppliers and pharmaceuticals manufacturers, for example. These defensive stocks tend to keep growing profits regardless of economic, political or social upheaval.
You can also invest in UK shares that have competitive advantages (called ‘economic moats’) like exceptional brand power to help keep revenues on an upward slant. Buying shares on low earnings multiples also allows a margin of safety in case the trading outlook suddenly worsens.
12% dividend yields
The stock market crash leaves plenty of attractive UK shares like these waiting to be picked up today. Here are a few I’m thinking of snapping up for my own ISA.
- Premier Foods deals on a forward price-to-earnings (P/E) ratio of 9 times today. It’s a reading I don’t think reflects the food producer’s ultra-defensive operations. And it also doesn’t reflect the company’s market-leading products like Mr Kipling cakes, which command customer loyalty like few others.
- Direct Line Insurance Group carries a reasonable forward earnings multiple of 12 times. I’d buy it as I don’t expect demand for its earnings-driving home and motor products to slump any time soon. This UK share also has formidable brand power to keep the top line ticking over. One final (and excellent) reason to buy today: at current prices Direct Line sports a mighty 12% dividend yield.
- I think Babcock International’s forward P/E ratio of 6 times and 4% dividend yield makes it too good to miss. Manufacturers of defence products shouldn’t expect orders or revenues to dry up as geopolitical tension rises and global terrorism increases. Global arms spending rose at its fastest pace for a decade in 2019.
Make a million
This is just a taster of the exceptional UK shares available for risk-averse investors to buy today. And The Motley Fool’s epic catalogue of exclusive reports can help you find even more. So do some research and get investing today, I say. You could get seriously rich and possibly even make a million.
Royston Wild 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.