Some investors are fretting about Covid-19 and its potential to trash economies again with a second wave. Meanwhile, businesses are battling on, and governments around the world are refusing to completely lock down economic activity as the UK did in the spring.
Indeed, treatments for the viral infection have improved. And policymakers are talking about a balance of risks and the need to tread a narrow path through the pandemic. There’s been wide recognition that, if we’re not careful, the cure can be worse than the disease. Indeed, broken economies will not help the physical, mental and emotional health of anyone.
The time looks right to aim to make a million with shares
But has the coronavirus become a distraction from the real drivers of economic prosperity? For example, slipping into the public domain almost unnoticed, the latest projections from the IMF are encouraging. In 2019, the growth in gross domestic product (GDP) in China amounted to just over 6%. But the IMF forecasts a decline in GDP growth to just under 2% in 2020 because of the pandemic. However, the interesting part is the IMF’s prediction for GDP growth during 2021 in China – more than 8%.
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Indeed, China could be set to bounce back strongly. I think that’s significant because strong growth in China did a lot to keep world growth going over the past couple of decades. Perhaps this is an early indicator that the world could be about to shift into a new growth phase. I think that’s likely because, historically, recovery and growth have always followed every recession and depression. These things tend to be cyclical, after all.
Meanwhile, the stock market continues to languish with many share prices remaining depressed. I think it’s a good time to start building a portfolio of long-term positions that could help to propel you to a million with shares over the coming years.
Buying and holding for the long term
If you look at the world’s most successful investors, in many cases they made their fortunes by buying and holding their positions for a long time. One obvious example is Warren Buffett. He’s well known for buying stocks at fair prices and holding for years as the underlying businesses recover and grow. Others, such as Bill Gates (Microsoft), Mark Zuckerberg (Facebook), Jeff Bezos (Amazon), Larry Page and Sergey Brin (both Google) founded businesses and stuck with them for decades.
You can replicate that strategy now. Indeed, the stock market in its current depressed state is a fertile hunting ground for buying shares and share-backed investments at good-value prices. You could take a broad-brush approach and invest in collective investment vehicles, such as investment trusts. I like the look of Lindsell Train Investment Trust and Blackrock Throgmorton Trust. Or you could go for tracker funds such as UBS S&P 500, HSBC FTSE 250 or Vanguard FTSE 100 Index.
I’d also be keen to mix into my portfolio with some stocks backed by good-quality businesses, such as GlaxoSmithKline, Sage and Tate & Lyle. Whatever investments you choose, you can aim for a million by compounding your gains over the long haul.
