A stock market crash is nobody’s idea of a good time. Watching a portfolio shrink in value is genuinely painful, especially for newer investors experiencing volatility for the first time.
But here’s what the experts know: a crash isn’t the time to panic. In fact, it’s the time to buy. And with the right approach, an average everyday investor could even retire a full decade earlier than planned. Here’s how.
Why crashes create life-changing opportunities
Investors who bought during the 2008 financial crisis, the 2020 pandemic crash, and the 2022 correction went on to earn extraordinary gains as prices recovered and then surpassed previous highs while dividends steadily followed.
The maths of why this matters are compelling. An investor putting aside £500 a month and earning the stock market’s long-run average of 8% a year would accumulate around £1.1m after 35 years.
However, an investor who capitalises on crash-induced bargains and secures superior long-term gains can drastically shorten this journey. In fact, with just a 13% annualised return, that same £1.1m threshold can be reached in just 25 years instead.
Obviously, securing consistently higher returns is easier said than done. But the evidence clearly shows that buying quality businesses at temporarily depressed prices is one of the most reliable ways to target exactly that.
Which shares should investors be watching?
While it’s impossible to know when the next crash will occur, the likelihood of a market meltdown eventually hitting investors’ portfolios over the next three decades is almost a certainty.
The key to success is to begin identifying the top-notch businesses ahead of time. That way, when everyone else is panicking, you’ve already got a strategy ready to execute.
So what are the quality stocks that investors should be watching right now?
There are quite a few candidates out there but right now, Rolls-Royce (LSE:RR.) has my attention.
Buying at a better price
The transformation at Rolls-Royce over the last three years has been remarkable. In its latest trading update, CEO Tufan Erginbilgiç reaffirmed full-year guidance of £4.0bn-£4.2bn in underlying operating profit and £3.6bn-£3.8bn in free cash flow for 2026.
Those figures are massively ahead of levels achieved in 2023. And it isn’t so surprising given that Civil Aerospace engine flying hours are running at 115% of 2019 levels, original equipment Defence deliveries are up over 20% year on year, and Power Systems booked a record order month in March with its backlog swelling to £7.3bn.
