How much would a £20k Stocks and Shares ISA started during the last stock market crash be worth now?

With the FTSE 100 hitting a new all-time high last week, some investors will be looking at their Stocks and Shares ISA with a sense of satisfaction.

It may seem an odd time to think about a stock market crash. But a crash can sometimes offer a rare opportunity to buy into great shares at unusually low prices.

So, if someone had put £20k into a Stocks and Shares ISA at the low point of the last stock market crash in 2020, what would it be worth now?

Reducing risk through diversification

That would depend on what they bought, of course.

In this example I presume they bought into a FTSE 100 tracker.

Why? During a crash, some shares tumble in value for no good reason – but others fall because they were previously overpriced.

Picking individual shares in such a scenario brings risks (as always), but investing in a broad-based index like the FTSE 100 means that a few bad performers do not necessarily hurt the overall return too much.

The FTSE 100 has soared!

The Footsie is up 20% over the past year alone. That is impressive for an index of large companies, many in mature industries.

Since the March 2020 crash, the index is up by 91%. So a £20k Stocks and Shares ISA invested in it back then now ought to be worth around £38,200.

Choosing the right index tracker could have helped returns by minimising fees. Not all index trackers are created equal.

The same is true of Stocks and Shares ISAs, so it pays to choose an ISA carefully.

Don’t forget the dividends!

Having an ISA almost double in under seven years is impressive stuff, especially while sticking to a broad-based blue-chip index rather than far riskier shares.

But that’s not all! The capital gain is great – but there have been dividends along the way too.

Currently, the FTSE 100 yields 3%. But something good about buying shares when they are cheap is that the yield is correspondingly higher compared to the same shares at a higher price (assuming the dividend is unchanged).

So someone who invested like this back in March 2020 would be earning close to 6% in dividend yield on that initial investment – around £1,200 per year of passive income.

I’m not waiting for the next crash

When the next crash comes, I want to be ready to act by knowing what shares I would like to own if I could buy them at the right price.

But nobody knows when that will be. Meanwhile, I am hunting for bargain shares to buy now.

One I recently added back into my Stocks and Shares ISA is Henderson Far East Income (LSE: HFEL). The FTSE 250 investment trust is actually 4% cheaper now than it was back in March 2020.

But it has grown its dividend per share annually, meaning it currently yields a juicy 9.8%.

I like its exposure to Asian economies that have good growth prospects. It also has lots of exposure to chipmakers in the Far East – a risk given current market nervousness, but over the long term something I see as positive.

No dividend is guaranteed to last, but the trust managers have proven their ability to pay high dividends over the medium- to long-term.

What income stock do we like better than Henderson Far East Income right now?

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Christopher Ruane owns shares in Henderson Far East Income.