The stock market crash may be the perfect time to invest in a Stocks and Shares ISA

It’s Stocks and Shares ISA time and the market crash is throwing up bargain FTSE 100 (INDEXFTSE:UKX) stocks.

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 been a rollercoaster ride for investors, although the trajectory has mostly been down. The FTSE 100 seems to have found a floor at around 5,000, but another bout of panic could still smash it lower. This year’s deadline for using your £20,000 Stocks and Shares ISA allowance is fast approaching, so what should you do?

If your income is holding up through the coronavirus crisis and you’ve money to invest, the stock market crash could be a fantastic opportunity to invest tax-free through a Stocks and Shares ISA, at today’s greatly-reduced prices. 

Nobody knows where the FTSE 100 will go next. That’s how it is during a stock market crash, especially one on this scale.

Stocks and Shares ISA time

This isn’t the time to commit any short-term savings to a Stocks and Shares ISA, although in truth, it never is. You should never invest money you might need for at least five years, and preferably far longer. The Covid-19 crisis only underlines the importance of that traditional investment advice.

So, if you’ve cash in the bank you may need in the uncertain weeks ahead, that shouldn’t go into shares today. On the other hand, now may be a terrific time to invest long-term money into top FTSE 100 blue-chip companies that have been ravaged by recent events.

We’re all racked with uncertainty right now, but in five or 10 years, the world will hopefully have moved on, and so will share prices.

Short-term pain, long-term gain

Many companies are cutting dividends right now. Pub chain JD Wetherspoon, high street retailer Marks & Spencer Group and housebuilder Crest Nicholson Holdings have all scrapped payouts this morning, and more will follow.

However, this is the emergency phase of the coronavirus crisis, when government, businesses, and ordinary people have to take drastic measures to survive. If you weren’t taking a bigger risk than usual, the FTSE 100 wouldn’t be this cheap.

The rewards of investing in a Stocks and Shares ISA are greater too, provided you plan to hold for the long term. Those dividends will return, gradually. Share prices will recover when the stock market crash burns itself out. Today’s bargains could turn into tomorrow’s recovery heroes.

I would focus on companies with strong balance sheets, low debt, loyal customers, and a strong market position. They’re best placed to withstand the downturn, and make maximum use of the recovery, as rival companies potentially go bust.

Stock market crash won’t last forever

You’ll have your own favourites. Mining giants such as BHP Group and Rio Tinto could do well when the economy picks up again. Oil majors BP and Royal Dutch Shell have fallen so dramatically they may be due a rebound.

Pharmaceutical stocks like AstraZeneca and GlaxoSmithKline offers solidity. If you’re feeling brave, now could prove a good time to invest in a Stocks and Shares ISA.

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 owns shares of and has recommended GlaxoSmithKline. The Motley Fool UK has recommended AstraZeneca. 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

Investing Articles

Up 26%, can the BT share price really push higher still?

The BT share price has surged on several catalysts in 2024, but there’s evidence to suggest that the stock could…

Read more »

Man writing 'now' having crossed out 'later', 'tomorrow' and 'next week'
Investing Articles

What are the best dividend shares to buy right now?

As shares in B&M European Value Retail have fallen, the dividend yield has reached a 10-year high. Should investors be…

Read more »

Surprised Black girl holding teddy bear toy on Christmas
Investing Articles

My favourite FTSE 100 passive income stock that keeps the Christmas coffers full

The holiday season is expensive and can leave many consumers struggling to make ends meet. Here’s how I use a…

Read more »

Investing Articles

The latest growth forecasts suggest the Glencore share price will hit 555p!

Harvey Jones has been disappointed by the performance of the Glencore share price since he bought the commodity stock last…

Read more »

Dividend Shares

A closer look at the 11% dividend yield forecast for Phoenix Group shares

Phoenix Group shares have one of the highest dividend yields in the FTSE 100 index today. Could this be a…

Read more »

Investing Articles

If I’d put £25,000 into the FTSE 350 at the start of 2024, here’s how much I’d have today!

Many FTSE shares have rebounded this year as interest rates look set to keep heading lower and market appetite for…

Read more »

Investing Articles

Up 40%, but experts forecast the easyJet share price could soon hit 664p! Time to buy?

The easyJet share price has been flying lately and stock analysts are predicting more fun to come. But there's only…

Read more »

Storytelling image of a multiethnic senior couple in love - Elderly married couple dating outdoors, love emotions and feelings
Investing Articles

Worried about tax raids? Here’s how I’m targeting a £44,526 passive income with shares

Investing in a Self-Invested Personal Pension (SIPP) or Individual Savings Account (ISA) can supercharge one's passive income, says Royston Wild.

Read more »