Don’t waste the stock market crash! I’ve just invested £1k in the FTSE 100

The stock market crash is turning the FTSE 100 (INDEXFTSE:UKX) into an unmissable bargain.

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.

The stock market crash has knocked 7.5% off the FTSE 100 this morning, and it now trades just below 5,000.

So how did I respond to the increasingly dire-looking situation? I put my money where my mouth is, and did what I’ve been suggesting readers consider doing. I bought shares. In this instance, investing £1k in a FTSE tracker.

If you don’t take advantage of moments like these, you may regret it one day. It isn’t easy going against the crowd though, especially when they’re stampeding for the exits. I reckon this stock market crash has further to run, so why did I act today?

Every investor has to accept that they’ll never call the exact bottom of the market. Anybody who does will have to put it down to luck rather than judgement. Markets are impossible to time, given all the variables and uncertainties.

Stock market crash is also an opportunity

Yet I took a chance because 7.5% in a day is an almighty drop. It seems to have been driven by the US Federal Reserve’s move to slash interest rates to zero. Investors were worried that the Fed knew something they didn’t.

They also know the impact will be limited, as the recession will happen due to a collapse in demand as countries close and people self isolate. A drop in mortgage rates is hardly going to persuade shoppers to go on a spending spree, given current uncertainties.

Once markets have digested the news, they may calm down a little. Some kind of relief rally is likely. I won’t buy into that.

There are so many attractive blue-chip companies on the market trading at fire-sale prices. I’ve been waiting for a moment like this, ever since the FTSE 100 and other global indices soared in the wake of the financial crisis.

I took advantage of that stock market crash too, but wished I’d been bolder. I don’t want to kick myself this time.

The FTSE 100 will remain volatile

If you’re buying individual companies for your Stocks and Shares ISA, look for those with strong balance sheets, healthy cash flows, loyal customers and minimal debt. I took the tracker route this time. Next time I’ll probably target individual stocks.

I’m aware that in a few days I might look silly. This stock market crash could have a lot further to run, and my £1k could be worth a fair bit less.

If that happens, I’ve a cunning plan. I will invest another £1k and pick up more shares at the new reduced prices. If the FTSE 100 dips even further, then in I go. There’ll be more buying opportunities.

I plan to leave the money invested for 15 to 20 years at least, by which time I hope the coronavirus is just a nasty memory. And the opportunity to buy the FTSE 100 at below 5,000 looks like the investment of a lifetime.

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 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.

More on Investing Articles

happy senior couple using a laptop in their living room to look at their financial budgets
Investing Articles

How’s the dividend forecast looking for Legal & General shares in 2025 and beyond?

As a shareholder, I like to keep track of the potential dividend returns I could make from my Legal &…

Read more »

artificial intelligence investing algorithms
Investing Articles

Could buying this stock with a $7bn market cap be like investing in Nvidia in 2010?

Where might the next Nvidia-type stock be lurking in today's market? Our writer takes a look at one candidate with…

Read more »

Investing Articles

Is GSK a bargain now the share price is near 1,333p?

Biopharma company GSK looks like a decent stock to consider for the long term, so is today's lower share price…

Read more »

Snowing on Jubilee Gardens in London at dusk
Investing Articles

Could December be a great month to buy UK shares?

Christopher Ruane sees some possible reasons to look for shares to buy in December -- but he'll be using the…

Read more »

Young mixed-race couple sat on the beach looking out over the sea
Investing Articles

Sticking to FTSE shares, I’d still aim for a £1,000 monthly passive income like this!

By investing in blue-chip FTSE shares with proven business models, our writer hopes he can build sizeable passive income streams…

Read more »

Growth Shares

BT shares? I think there are much better UK stocks for the long term

Over the long term, many UK stocks have performed much better than BT. Here’s a look at two companies that…

Read more »

British Pennies on a Pound Note
Investing Articles

After a 540% rise, could this penny share keep going?

This penny share has seen mixed fortunes in recent years. Our writer looks ahead to some potentially exciting developments in…

Read more »

Silhouette of a bull standing on top of a landscape with the sun setting behind it
Investing Articles

Is the S&P 500 going to 10,000 by 2030? This expert thinks so

One stock market strategist sees animal spirits taking hold and driving the S&P 500 index even higher by the end…

Read more »