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

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A plan to invest £1k today in UK shares could benefit from a likely stock market recovery over the long run. The FTSE 100 and FTSE 250 contain a number of stocks that currently trade at prices that may not fully reflect their prospects over the coming years.

As such, buying them could lead to impressive returns that improve an investor’s prospects of achieving financial freedom.

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Here are four such companies that may be worth buying for the long term based on their future prospects and market positions ahead of a likely stock market rally.

Sound strategies for a £1k investment in UK shares

Company strategies could make a real impact on the success or failure of a plan to invest £1k today in UK shares. After all, the operating landscape for many businesses has changed dramatically in the current year. This means that new growth strategies may be required to adapt to changing market conditions.

As such, FTSE 100 stocks such as Aviva and Vodafone could have appeal over the long run. Vodafone’s recent results highlighted that it is in the process of seeking to simplify its business model in a bid to become more efficient. This may reduce costs. It’s also investing in improving customer loyalty through better service levels. Meanwhile, its investment in digital opportunities could also provide it with a clearer competitive advantage.

Similarly, Aviva’s latest results showed it’s aiming to improve its market position through making use of its competitive advantages in core markets. It’s also likely to increasingly focus efforts on a smaller number of opportunities that may leverage its economic moat in specific markets. This could lead to an improving financial performance over the long run.

Buying FTSE 100 stocks from unpopular sectors

A plan to invest £1k in UK shares that are currently unpopular among investors could also improve an investor’s chances of achieving financial freedom. It may mean that they can buy high-quality companies for less than they are worth. This may lead to strong capital gains in the long run.

As such, British American Tobacco could be a profitable investment in the coming years after facing a challenging performance in recent years. Its high yield, potential to move into non-combustible products and plan to reduce debt may also contribute to improving financial performance.

Meanwhile, Taylor Wimpey’s uncertain financial prospects in the near term may mean that it also offers a wide margin of safety. The positives here are its increasing land bank, substantial cash position and a likely recovery in the housing market due to low interest rates. This may mean its share price decline in 2020 now undervalues its long-term prospects. As such, within a diverse portfolio of UK shares, it may offer impressive return prospects.

A Top Share with Enormous Growth Potential

Savvy investors like you won’t want to miss out on this timely opportunity…

Here’s your chance to discover exactly what has got our Motley Fool UK analyst all fired up about this ‘pure-play’ online business (yes, despite the pandemic!).

Not only does this company enjoy a dominant market-leading position…

But its capital-light, highly scalable business model has previously helped it deliver consistently high sales, astounding near-70% margins, and rising shareholder returns … in fact, in 2019 it returned a whopping £150m+ to shareholders in dividends and buybacks!

And here’s the really exciting part…

While COVID-19 may have thrown the company a curveball, management have acted swiftly to ensure this business is as well placed as it can be to ride out the current period of uncertainty… in fact, our analyst believes it should come roaring back to life, just as soon as normal economic activity resumes.

That’s why we think now could be the perfect time for you to start building your own stake in this exceptional business – especially given the shares look to be trading on a fairly undemanding valuation for the year to March 2021.

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Peter Stephens owns shares of Aviva, British American Tobacco, Taylor Wimpey, and Vodafone. 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.

Our 6 'Best Buys Now' Shares

The renowned analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

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