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The FTSE 100 received’t be the very best place for each investor. No, everybody must base their decisions on their very own wants and their very own analysis. Nevertheless it’s the place I most wish to put my cash in 2024, and past.
Over within the US, each the S&P 500 and Nasdaq hold hitting new all-time highs. Actually, the S&P 500’s up 23% to date in 2024, whereas our expensive previous FTSE 100 has placed on simply 9%. And the Footsie nonetheless hasn’t matched the 52-week excessive of 8,474 factors it reached as way back as Might.
So the UK inventory market’s a loser then, and greatest averted? No, it’s nonetheless my favorite, for a couple of key causes.
However low, proper?
The primary motive is that I wish to purchase shares once they’re low cost. Isn’t that what everybody needs? It would make economists pleased when inventory markets are buzzing. But when we plan to maintain shopping for shares for the long run, we must always absolutely need costs and valuations to remain low.
My different key motive is that I’m going principally for dividend shares, and the FTSE 100 has a few of the greatest yields I can discover. We’re taking a look at a forecast common dividend yield of three.7% this yr, together with all of the low ones, rising to 4% in 2025. That’s simply bizarre dividends, and doesn’t embody any specials.
And we even have what ought to be a long-term increase from the £50bn in share buybacks which were introduced to date in 2024.
Lengthy-term favorite
For example, let’s have a look at one among my prime FTSE 100 shares, Aviva (LSE: AV.)
The five-year share worth chart above, may not look nice. Nevertheless it’s precisely what I need, and I hope it stays unimpressive for at a couple of extra years but.
What it means is I should buy extra Aviva shares on a ahead price-to-earnings (P/E) ratio of 12 this yr, with forecasts dropping as little as 9.2 by 2026 (based mostly on at present’s worth).
And I might snag a fats 7% dividend yield, if these forecasts are correct. Oh, and the analysts assume it would carry on rising within the subsequent few years too.
Dangers
The Aviva dividend, like all dividend, isn’t assured. The insurance coverage sector carries cyclical threat too, and at present’s upbeat outlook might change faster than we would anticipate. Inflation and rate of interest uncertainty don’t assist.
Investing on this sector, as in any sector, means we have to perceive the companies we purchase. And that brings me to a different motive why I like FTSE 100 shares a lot.
I perceive the insurance coverage sector fairly effectively, particularly within the context of the UK market and financial system. And that should give me a bonus.
Backside line
So to sum up, investing in FTSE 100 shares places me in companies I perceive within the financial system that I do know greatest. And at instances like these, it will possibly maximise my possibilities to purchase low cost, and hopefully lock in years of dividend revenue.
Oh, and there are different FTSE 100 sectors I additionally like and perceive, additionally at good valuations. So there’s loads of scope for diversification.
