UK shares: How a 2021 stock market recovery will boost my chances of becoming an ISA millionaire!

Royston Wild
·3-min read
The letters ISA (Individual Savings Account) on dice on stacks of gold coins on a white background.
The letters ISA (Individual Savings Account) on dice on stacks of gold coins on a white background.

UK share markets have got off to a strong start in December. The FTSE 100 is fast approaching its recent five-month peaks as regulators cast their eye over major Covid-19 vaccines. We could be on the cusp of a strong Santa Rally should a drug roll-out across North America and Europe begin soon.

This is a great time to buy UK shares, in my opinion. Sure, there is still plenty of uncertainty over when and how coronavirus vaccines will be rolled out to the global population. But there are plenty of top British stocks that continue to trade well below value following the stock market crash of early 2020.

Investing to become an ISA millionaire

I’ve continued buying UK shares this year to grab some bona fide bargains. And I’m on the hunt for more, what with a new bull market possibly upon us. I buy stocks with a view to making money on them over the long term, say a decade or more. But timing your buys to coincide with stock market rallies can give your eventual returns an extra little kick.

Some investors even use bull markets as the foundation of their investment strategies. They spend huge amounts on oversold UK shares of sound quality in the aftermath of a stock market crash. And they then watch them balloon in value as economic conditions improve, corporate profits bounce back, and confidence floods back into financial markets.

Image of person checking their shares portfolio on mobile phone and computer
Image of person checking their shares portfolio on mobile phone and computer

This is how thousands of UK share investors made millions following the 2008–09 banking crisis. They invested in companies with strong balance sheets that allowed them to ride out the global economic downturn. Firms which retained strong long-term profits potential despite the challenges thrown up by the financial crash. These individuals then sat back and made mountains of cash as these shares soared in value.

The FTSE 100 more than doubled in value (it rose 120%, to be exact) between February 2009 and May 2018 as the economic landscape recovered. Meanwhile the FTSE 250 soared more than 250% over the same period. I reckon the new bull market in a post-coronavirus landscape will deliver similarly brilliant recoveries in UK share prices, making investors a fortune in the process.

Getting rich with UK shares

You don’t have to spend shedloads of cash to try and make a million on the London Stock Exchange, though. The average annual return for long-term UK share investors sits at between 8% and 10%. This means that someone who starts investing £500 a month can, over 30 years, have a very realistic chance of getting a seat on millionaire’s row.

As history has shown us, though, buying UK shares after a stock market crash can allow investors to become a millionaire in a much shorter span of time. It can also turbocharge what that £500 (or whatever you choose to invest) a month will make you over the long term. This is why I’ve continued to buy stocks in my Stocks and Shares ISA after the 2020 stock market crash. And there are plenty more top-quality UK shares I’m thinking of buying today.

The post UK shares: How a 2021 stock market recovery will boost my chances of becoming an ISA millionaire! appeared first on The Motley Fool UK.

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Royston Wild 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.

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