We all dream of millions of pounds from UK shares. Many stock investors have made gigantic pension pots with a little dedication and regular investment. But the number of people who have joined the millionaire’s club has been far less impressive. It doesn’t have to be this way though.
Studies show that long-term investors make an average annual return of between 8% and 10%. This means that someone who can invest a decent amount regularly can turn their hard-saved cash into something really spectacular. Let’s say you can buy £500 worth of UK shares a month over the space of 30 years. And you buy with the intention of holding them for a minimum of a decade, the sort of time frame which will allow them to recover from any temporary volatility.
Over this sort of period you can expect to have made between £704,000 and £1.03m on your total investment of just £180,000. That’s quite an eye-popping profit I’m sure you’d agree.
Making millions with UK shares
You can significantly improve your chances of making a million with UK shares by buying after stock market crashes. The Stocks and Shares ISA has been around for decades, yet the number of people making millions in these sort of products has only exploded more recently.
Why? Well these newest members to the millionaires’s lounge bought in the aftermath of the banking crisis back in 2008–09. Then UK shares were changing hands for next to nothing. So these ISA investors loaded their stock portfolios at low cost and watched the value of their assets explode as the economic recovery took hold and confidence came flooding back to the markets.
2 top-class ISA buys
It’s my intention to follow their example by buying UK shares despite the uncertain economic outlook. There’s far too many top-class shares trading at rock-bottom prices to miss out on, in my book. I’ve already added to my Stocks and Shares ISA after the stock market crash and I’m thinking of buying these quality stocks as well:
- ITV’s been hit by sinking advertising revenues in 2020, and a cloudy outlook for marketing budgets continue to weigh on the former FTSE 100 stock. But I reckon a forward price-to-earnings (P/E) ratio of 8 times reflects these problems and makes it an attractive dip buy. I’m encouraged by the broadcaster’s steps to embrace the fast-growing digital segment. And I like ITV’s measures to turn its ITV Studios arm into a global production giant too.
- I also expect Vistry Group’s share price to recover strongly from its recent lows. This UK share trades on a P/E multiple of 10 times, a figure which doesn’t reflect how strong trading has been across the housebuilding sector since lockdown measures were rolled back. Low interest rates and ongoing government support like Help to Buy is supporting demand for newbuild homes. I expect sales of Vistry’s homes to remain strong, too, given the colossal size of Britain’s housing shortage.
Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended ITV. 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.