Investing money in cheap UK shares after the market crash could prove to be a very profitable move. The stock market’s past performance is relatively sound. Indexes such as the FTSE 100 have produced annualised gains in recent decades of around 8% per annum. This is significantly higher than other mainstream assets.
However, in the short run, the stock market could experience a second market crash. High volatility may mean that investors experience paper losses. As such, holding on to stocks for the long term is likely to be key to unlocking their growth potential.
Short-term risks to UK shares
Investor sentiment towards UK shares has improved significantly since earlier this year. The stock market has made strong gains, but there are still a number of companies that trade on low valuations.
In the coming months, those valuations could realistically come under substantial pressure. There are a variety of risks