Our view of the 2020 stock market crash couldn’t be clearer. We at The Motley Fool reckon the ‘correction’ earlier this year has created an excellent opportunity for you and I to turbocharge the profits we can make on UK shares.
Many British investors made fortunes (even millions) by buying after the last major market crash that accompanied the 2008 banking crisis. Modern day investors can replicate their successes and make a lot of money through buying quality shares today and watching them soar from their current lows as the global economy steadily improves and company profits bounce back.
It’s true that another stock market crash could be just around the corner. It’s not just the relentless spread of Covid-19 that could hurt investor confidence again. Extreme political turbulence in the US — worsened by news that President Donald Trump has contracted coronavirus — might force sellers to re-emerge too. You’ve also got concerns running in the background over how much more firepower central banks have to repair the global economy.
The threat of another correction, though, hasn’t stopped me from continuing to buy shares. Why? Well past form shows that, corrections or not, buyers of UK shares can still expect to make delicious returns. Over a decade or more, the average annual return sits anywhere between 8% and 10%, even adjusting for the impact of stock market crashes.
What other forms of investment can give you this sort of return? Certainly not Cash ISAs where even the best-paying accounts offer interest rates below 1%. Not buy-to-let either, where increasing tax bills for landlords, rising fees and higher regulatory standards take an enormous bite out of profits. These issues make UK shares both a simpler and more lucrative way to make money on your hard-earned capital.
Bitcoin vs UK shares
Would you be better off investing in Bitcoin than UK shares, though? Volatility in digital currency prices has made plenty of millionaires over the past decade. But this extreme choppiness has also cost lots of people their shirt. Particularly those who have used leverage to build their positions.
Just in the last six weeks, Bitcoin’s lost 16% of its value in what’s been, broadly speaking, a more stable period across broader financial markets. And I remain concerned (like investment gurus such as Jim Rogers) that the price of the virtual currency could eventually fall to zero. There remain serious questions over Bitcoin as a legitimate asset class that are yet to be answered. And the failure to get a Bitcoin-backed exchange-traded fund (ETF) off the ground hasn’t exactly inspired me with confidence.
Why take a gamble with something that could eventually be proven a fad? Stock markets have been around for centuries and they’ve been making people like you and I a lot of money in that time. This is why I invest my spare cash in UK shares and nowhere else. And with the help of experts like The Motley Fool, it’s possible to turbocharge your long-term returns and make a killing.
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.