With many UK shares trading at low prices even after the stock market recovery, now could be the right time to buy stocks. After all, the FTSE 100 has always recovered from its declines to post new record highs.
Furthermore, an investor may be able to improve on the market’s return prospects through buying the best shares now. They could be those companies offering financial strength and a wide economic moat. Over time, they could offer a higher chance for an investor to double their money.
Buying UK shares to double an investment
Investing £20k in UK shares today could be a sound means of generating high returns. The index trades significantly down on its previous high. This suggests there’s further to run for the stock market rally of recent months.
The FTSE 100 has posted high single-digit annual returns on a total return basis since it was formed in 1984. Therefore, an investor who obtains the same return as the stock market could turn £20k into £40k within around nine years.
However, with many UK shares currently trading at cheap prices, that process may be shortened. Investors who’ve previously bought a range of companies after a market crash, such as the one we’ve experienced in 2020, have generally benefited from a long-term recovery.
The most recent example of this was the global financial crisis. Then the FTSE 100 halved before more than doubling in the following years.
Investing money in the best shares now
An investor in UK shares may be able to further improve their returns by purchasing the best shares now. They could include companies such as Vodafone and Tesco that have produced resilient financial performances in recent months.
They may be better able to withstand further political and economic risks in the short run. So they can benefit from a likely improvement in operating conditions in the coming years.
Similarly, FTSE 100 shares such as Unilever and Burberry appear to have wide economic moats that could enable them to outperform sector peers. This may mean they can cope with disruption in the short run to capitalise on improving consumer confidence in the long run.
Their strong brands may also mean they enjoy high customer loyalty that leads to a growing market share in the coming years.
Market-beating returns
Of course, every investor will have their own ideas as to which UK shares are the best stocks to buy now. However, by purchasing high-quality businesses when they trade at at low prices, and holding them for the long run, it’s possible to obtain market-beating returns.
In the coming years, this could mean an investor is able to double their money at a relatively fast pace. And consequently enjoy greater financial freedom as a result.
