FTSE 100 stocks: a once-in-a-decade opportunity to get rich

Here’s why 2023 might turn out to be the best year to buy FTSE 100 stocks, in a Stocks and Shares ISA, as the index regularly hits new highs.

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Today’s high interest rates are starting to make a Cash ISA look a bit more attractive. Some are offering as much as 4% for a fixed one-year term. I really can see why investors might go for that, rather than take a risk on FTSE 100 stocks.

I mean, recession is very likely, and the world economy looks uncertain. The attraction of a safe, tax-efficient, 4% return in such times is clear. For those who really want to minimise risk, it’s almost a no-brainer, isn’t it?

Well, I think right now could be a great time to put money into a FTSE 100 Stocks and Shares ISA instead. I’ll explain why.

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FTSE 8,000

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The Footsie finally broke through 8,000 points in February, creating an all-time high. But it didn’t hang on to it, and quickly fell back. This is at a time when a lot of top UK stocks look like very good long-term value to me.

A bullish decade ahead?

The FTSE 100 is up 20% in the past decade. And I reckon 10 years ago was an especially good time to buy too. But it’s all been part of a very erratic century so far for UK stocks. Since the end of 1999, we’ve seen a rise of only around 15%.

UK economic production in 2020 was a full 85% higher than in 1999. Yet the companies generating it are worth only 15% more today.

Shares were hammered during the pandemic, but the risk was a lot higher then. And I reckon the outlook now for UK company earnings is the best it’s been for some time. We might just be on the verge of a new bull run.

Soaring dividends

I’d say the undervaluation also shows in dividends. In 2018, FTSE 100 companies paid out a total of £85.2bn in dividends. That’s more than the economy of Bulgaria.

The annual cash bonanza was dented a bit by the pandemic, but not by much. And 2023 forecasts already indicate another new all-time record. Analysts predict a bumper payout of £85.8bn this year. Does that sound like a stock market to be fearful of?

Should we shun the opportunity to snag a lifetime of passive income from UK dividends? And go for the 4% we could get from a Cash ISA instead, a return that’s certain to fall when interest rates decline again? That’s not for me.

Best value

In summary, I think lead index stocks are the most attractive they’ve been for a good few years. Many individual valuations are super-low, and dividends are high and climbing.

The combination of high interest rates and economic fear has driven a lot of money away from the stock market and into a Cash ISA and gold. And that helps keep shares cheap.

If an investor asks me what’s best time to invest in a Stocks and Shares ISA, I’ll always say now. That’s because I think the UK stock market is the best vehicle for getting rich in the long term. But sometimes it just seems more tempting than usual. This could be one of those times.

Our analysis has uncovered an incredible value play!

This seems ridiculous, but we almost never see shares looking this cheap. Yet this Share Advisor pick has a price/book ratio of 0.31. In plain English, this means that investors effectively get in on a business that holds £1 of assets for every 31p they invest!

Of course, this is the stock market where money is always at risk — these valuations can change and there are no guarantees. But some risks are a LOT more interesting than others, and at The Motley Fool we believe this company is amongst them.

What’s more, it currently boasts a stellar dividend yield of around 10%, and right now it’s possible for investors to jump aboard at near-historic lows. Want to get the name for yourself?

See the full investment case

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.

Views expressed 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.

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