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The FTSE 100 index of main firms comprises a few of the prime names in British enterprise, like Shell and Unilever.
That may not seem to be a ticket for progress. In any case, mature firms typically discover it tougher to develop their enterprise than smaller, nimbler upstarts.
Actually, although, it has been a wonderful 12 months for the index.
Robust worth progress
It has repeatedly hit a brand new all-time excessive in latest months – together with a brand new peak yesterday (3 March).
So, what would an investor now be sitting on if that they had 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% for the time being.
If somebody had purchased a 12 months in the past on the cheaper price, the yield can be accordingly increased. So, they’d now be yielding someplace within the area of three.9%.
So over the previous 12 months that may 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 virtually £11,900.
Right here’s one solution to put money into the FTSE 100
Shopping for shares in 100 totally different firms could possibly be time-consuming in addition to requiring important capital, not to mention incurring a lot of buying and selling charges.
That explains why lots of traders purchase shares in funds that observe the FTSE 100 index.
There are many choices obtainable and a few have extra enticing price buildings than others, so it may 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 based mostly on their very own circumstances, goals, and strategy. Reasonably than investing in a tracker fund, I want 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 underneath £6,700 even together with dividends – a far cry from the general FTSE 100 efficiency, alas.
However I’ve seen that share worth tumble as a shopping for alternative for my portfolio.
I want 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 just a few 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 pricey sportswear. The corporate understands its goal prospects nicely, it has a robust model, and an growth plan which means not solely does it have international 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 growth programme consuming into short-term income.
As a long-term investor, although, I reckon the present worth is nicely beneath what I anticipate JD Sports activities to be price in future. That’s the reason I’ve been shopping for the shares.
