Picture supply: Getty Photos
The FTSE 100 index of main corporations accommodates a few of the prime names in British enterprise, like Shell and Unilever.
That may not look like a ticket for progress. In any case, mature corporations usually discover it tougher to develop their enterprise than smaller, nimbler upstarts.
In truth, although, it has been a wonderful 12 months for the index.
Sturdy value progress
It has repeatedly hit a brand new all-time excessive in current months – together with a brand new peak yesterday (3 March).
So, what would an investor now be sitting on if they’d invested £10k into the FTSE 100 a 12 months in the past?
It has moved up 14.9% throughout that interval. So, a £10k funding ought to now be price round £11,490. Not unhealthy!
3.4% dividend yield from main blue-chip shares
The index additionally yields roughly 3.4% in the mean time.
If somebody had purchased a 12 months in the past on the cheaper price, the yield could be accordingly greater. So, they might now be yielding someplace within the area of three.9%.
So over the previous 12 months that might have added as much as near £400 of dividends on a £10k funding.
Taken collectively, £10k invested a 12 months in the past would now be price nearly £11,900.
Right here’s one strategy to put money into the FTSE 100
Shopping for shares in 100 completely different corporations may very well be time-consuming in addition to requiring vital capital, not to mention incurring numerous buying and selling charges.
That explains why loads of traders purchase shares in funds that observe the FTSE 100 index.
There are many choices accessible and a few have extra engaging price constructions than others, so it will possibly pay to do a little analysis and examine the alternatives.
Right here’s why I’m not shopping for a FTSE 100 tracker proper now
Personally, I don’t personal such shares and at the moment don’t have any plans to.
What works for various traders varies primarily based on their very own circumstances, targets, and strategy. Somewhat than investing in a tracker fund, I favor to purchase particular person shares.
For instance, one FTSE 100 share I’ve been shopping for is JD Sports activities (LSE: JD).
Over the previous 12 months, £10k invested within the retailer would have shrunk to beneath £6,700 even together with dividends – a far cry from the general FTSE 100 efficiency, alas.
However I’ve seen that share value tumble as a shopping for alternative for my portfolio.
I favor shopping for particular person shares to an index because it means I can put my cash into what I believe are nice companies not simply no matter ones make it into the index. JD Sports activities has issued a number of revenue warnings over the previous 12 months, however I nonetheless see it as an awesome enterprise.
Why?
It has a big buyer base that has confirmed keen to shell out on expensive sportswear. The corporate understands its goal clients nicely, it has a powerful model, and an enlargement plan meaning not solely does it have world attain, however that’s set to continue to grow.
The value fall factors to a few of the dangers, akin to a weak economic system hurting client spending and the store property enlargement programme consuming into short-term income.
As a long-term investor, although, I reckon the present value is nicely beneath what I count on JD Sports activities to be price in future. That’s the reason I’ve been shopping for the shares.
