Despite the recent stock market recoveryIt is possible to build a portfolio filled with cheap UK stocks.many FTSE 100 Stocks haven’t returned to 2019 levels and the lead index is still at record highs.
for that reason, Opportunity to buy Offering for long-term investors. High quality companies often trade at cheaper prices. Over time, they can offer high returns. Their value can even triple as the global economic recovery takes hold.
Buy cheap UK stocks to generate high returns
Buying cheap UK stocks has been a popular strategy for many years. The premise is simple: undervalued assets have more room to provide capital returns than overvalued assets. It is used following the previous bear market. Investors who bought cheap stocks after the global financial crisis and the dot-com bubble benefited from the subsequent bull market.
Obviously, many cheap stocks can be undervalued because they face difficult short-term outlooks. This may mean experiencing volatile performance in the short term, but the long-term outlook and financial performance of the economy may improve.
After all, the decline of all economies continues to recover. This may mean that today’s cheap UK equities are experiencing improved financial performance and valuation-boosting operating conditions over the next few years.
See beyond price when buying FTSE 100 shares
Of course, some cheap UK stocks may not recover from the current challenges. Many of the FTSE 100 shares are facing major changes within the industry. Indeed, the coronavirus can mean a permanent change in consumer spending habits over the next few years.
Therefore, it is wise to consider beyond the company price when deciding whether to buy. Its financial strength, market position and ability to adapt to changing industry trends are worth assessing before making a purchase. Otherwise, investors may end up with a portfolio that contains cheap stocks priced at low levels for good reason.
Similarly, the outlook for the UK economy in 2021 means that diversification is essential. Political and economic risks can increase in the short term. Having a wide range of cheap UK equities reduces overall risk and gives investors access to a long-term equity market recovery.
Triple your investment in cheap stocks
Tripled investment in cheap UK stocks may be far more achievable than many investors are aware of. After all, the FTSE 100’s 36-year lifetime total return of 8% means that investors will realistically triple their investment within about 15 years.
You can save time by buying quality companies at low prices. With so many buying opportunities offered, 2021 may be a good time to build a portfolio of undervalued stocks.
The views expressed about the companies mentioned in this article are those of the author and may differ from the official recommendations made by subscription services such as Share Advisor, Hidden Winners, and Pro. Here at The Motley Fool, by considering different insights, Better investors than us.
FTSE 100 Stocks: How to Triple Your Money by Investing in Cheap UK Stocks in 2021
https://www.fool.co.uk/investing/2021/01/01/ftse-100-shares-how-id-invest-in-cheap-uk-shares-in-2021-to-treble-my-money/ FTSE 100 Stocks: How to Triple Your Money by Investing in Cheap UK Stocks in 2021