Dip buyers remain in short supply following the stock market crash of early 2020. The FTSE 100 continues to struggle for traction around the 6,000-point marker as news of spiking Covid-19 infection rates and fresh lockdown measures dominate news wires. It’s possible UK share prices will sink again before they stage any sort of significant recovery.
That’s not to say you and I should stop buying British equities however. Stock market crashes are nothing new. They also don’t derail the possibility of making an absolute killing with UK shares. In fact, past form indicates those courageous enough to keep investing can seriously improve their chances of making a million. Perhaps even more.
Making millions with UK shares
Studies show us that long-term investors can still make handsome returns despite the pain caused by market crashes. The person who buys shares and holds them over the long run (a decade or longer) makes an average yearly return of between 8% and 10%.
Those who wish to hit the upper echelons of that range, or even exceed it, buy in the aftermath of share price crashes. They have an opportunity to watch the value of their UK shares balloon as the economic cycle moves off its lows.
Those proven rates of return show you don’t need to spend a fortune on UK shares to hit the big time either. Say you have £500 a month to invest in something like a Stocks and Shares ISA. If you regularly buy British stocks with that kind of cash you can, over the course of 30 years, expect to have made anywhere between £704,000 and £1.03m.
Thanks to the beauty of compound returns you can still make a decent pot of money even if you don’t have that much, or that long, to invest. Let’s say you’re aged 45, have no savings and can afford to spend £250 on UK shares a month. By the time you reach 65, you’ll likely have made a healthy pot of between £142,000 and £179,000 to retire on.
12% dividend yields!
As I say, I’ve continued to purchase UK shares despite the threat of another stock market crash. It doesn’t matter what your tolerance to risk is. There are stacks and stacks of quality stocks that could still make you a fortune over the long run, whatever the broad economic climate.
Risk-averse investors can choose to buy utilities providers like United Utilities Group, or electricity generators like SSE. Profits at firms like these remain stable in good times and bad. And these particular UK shares boast spectacular dividend yields of 5% and 6.7% respectively.
Nervous share pickers can also buy into food producers such as sausage casings maker Devro. This particular share sports a delicious 5.8% dividend yield. Or you can buy medicine maker GlaxoSmithKline and home and motor insurer Direct Line Insurance Group. Dividend yields for these UK shares sit at 5.2% and 12%.
Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended Devro and GlaxoSmithKline. 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.