Stock market recovery: how I’d invest £1k today to achieve financial freedom

If I was looking to invest £1k today, I’d target top FTSE 100 companies with great long-term prospects for the pandemic and beyond.

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.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

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.

If I was looking to invest £1k today, I’d think myself lucky. Following the stock market crash, there are plenty of bargains to be found on the FTSE 100. The biggest problem might be deciding which dirt-cheap share to buy, given the choice out there.

One issue I wouldn’t worry about is whether the stock market rally is set to continue, as Covid-19 vaccination programmes are put in place. While we all want the pandemic to be over as quickly as possible, what happens in the next few months shouldn’t affect how you invest £1k today.

You should be investing your £1k for a minimum five years and, ideally 20, 30, or 40 years. Over such a lengthy period, today’s number one worry will one day seem like a blip.

Tempting FTSE 100 shares

If I was looking to invest £1k today, or any other sum, I’d spend more time wondering which sector to target.

Should I make a beeline for shares that have been hit hardest by the pandemic, such as airlines, cruise operators, pub chains, hotels and oil & gas firms? Or should I look for stocks that have done well out of the last six months? Or, to put it another way, should I buy dirt-cheap Cineworld, or expensive Ocado Group?

I like to think of myself as a contrarian investor, one who loves picking up shares when they’re cheap, with the aim of holding them for the long run. However, I’m wary of companies such as budget airline operator easyJet and jet engine manufacturer Rolls-Royce Group. Both have surged since Pfizer‘s vaccine news broke on 9 November, but things could get tougher going forward. Their businesses have taken a severe hit. They’re not as cheap as they were. The recovery will be bumpy.

On the other hand, I’d shun lockdown winners. Food delivery companies such as Ocado and Just Eat Takeaway have climbed strongly as orders grew, and could suffer as people rush to eat out again next year. They’re too expensive for me.

Here’s how I’d invest my £1k today

If investing £1k in today’s market, I’d target top FTSE 100 companies with strong and stable future. Pharmaceutical giants AstraZeneca and GlaxoSmithKline would be high on my list, for income and growth. So would consumer companies with a broad portfolio of everyday branded products and loyal customers, notably Reckitt Benckiser Group and Unilever, as well as spirits giant Diageo.

US tech stocks have thrashed all-comers. I’d consider investing my £1k in FTSE 100 winners of the future such as Experian, Relx and Sage Group. I think UK shares could start playing catch-up if, and when, Brexit is resolved.

There’s a lot of choice out there. Whichever stock I buy, I’ll be holding it for the long term, to give my money time to grow. Then I’d start planning my next £1k investment. The more money you invest, the better your chances of achieving financial freedom, and possibly even retiring early.

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 recommended Diageo, Experian, GlaxoSmithKline, RELX, Sage Group, and Unilever. 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

Illustration of flames over a black background
Investing Articles

2 red-hot UK growth stocks to consider buying in April

These two growth stocks are performing well, but can they continue to deliver for investors through 2024 and beyond?

Read more »

Charticle

Is JD Sports Fashion one of the FTSE 100’s best value stocks? Here’s what the charts say!

The JD Sports Fashion share price remains a wild ride during the first quarter. Could it be one of the…

Read more »

Investing Articles

Could the JD Sports Fashion share price double in the next five years?

The JD Sports Fashion share price has nearly halved in the past five years. Our writer thinks a proven business…

Read more »

Bus waiting in front of the London Stock Exchange on a sunny day.
Investing Articles

If interest rate cuts are coming, I think these UK growth stocks could soar!

Falling interest could be great news for UK growth stocks, especially those that have been under the cosh recently. Paul…

Read more »

Investing Articles

Are these the best stocks to buy on the FTSE right now?

With the UK stock market on the way to hitting new highs, this Fool is considering which are the best…

Read more »

Petrochemical engineer working at night with digital tablet inside oil and gas refinery plant
Investing Articles

Can the Centrica dividend keep on growing?

Christopher Ruane considers some positive factors that might see continued growth in the Centrica dividend -- as well as some…

Read more »

Smiling family of four enjoying breakfast at sunrise while camping
Investing Articles

How I’d turn my £12,000 of savings into passive income of £1,275 a month

This Fool is considering a strategy that he believes can help him achieve a stable passive income stream with a…

Read more »

Person holding magnifying glass over important document, reading the small print
Investing Articles

2 top FTSE 250 investment trusts trading at attractive discounts!

This pair of discounted FTSE 250 trusts appear to be on sale right now. Here's why I'd scoop up their…

Read more »