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There is no such thing as a scarcity of pessimism in regards to the outlook for the UK financial system. However you would not realize it by wanting on the efficiency of UK shares.
For instance, final yr FTSE100 Britain’s foremost inventory index rose by a couple of fifth.
I feel it is a fairly thrilling achievement for a set of principally established corporations in a mature trade.
So might 2026 be one other classic yr?
financial system and market will not be the identical
There are numerous causes to be involved heading into this yr.
The UK financial system is weak, international geopolitical dangers stay excessive and there are indicators that shopper spending is slowing in lots of markets.
Once more, the identical was true at this stage final yr, with the FTSE 100 nonetheless doing nicely. A downturn within the financial system doesn’t essentially result in a downturn within the inventory market, particularly within the quick to medium time period.
As well as, there are some grounds for optimism in regards to the subsequent 12 months.
For instance, momentum towards an finish to Russia’s battle in Ukraine has been constructing over the previous yr. Some rising markets are rising nicely. Final yr’s tariff adjustments could change into a distant reminiscence.
So from a constructive perspective, 2026 might certainly be an excellent yr for UK shares.
That is my funding plan for 2026.
The reality is, we simply do not know.
However that does not change how I plan to spend money on the inventory market this yr.
Yearly, regardless of how robust the inventory market as an entire is and even when the financial system is doing nicely, some particular person corporations could do nicely whereas others could do poorly.
There’s a distinction between the efficiency of a inventory market index and the efficiency of particular person shares inside it. That was true final yr and will probably be true in 2026 as nicely.
This explains why, quite than shopping for indexes (e.g. by investing in index trackers), I purpose to carry a balanced, diversified portfolio of what I contemplate to be top quality shares bought at enticing costs. A number of well-known UK shares kind a part of its portfolio.
I want to proceed doing the identical factor this yr.
It is down, however is it out?
One UK inventory I purchased utilizing this strategy final yr was a FTSE 100 brewery and distillery. diageo (LSE:DGE).
I intend to proceed proudly owning Diageo past 2026 as I imagine within the potential monetary advantages of taking a long-term strategy to investing.
2025 was horrible. It has now modified administration, however that does not essentially imply will probably be in a position to overcome the challenges going through the corporate (and plenty of of its rivals).
These embody as we speak’s weak shopper spending on premium spirits and weakening long-term tendencies in alcohol consumption. Each assist clarify why Diageo shares fell in 2025.
Nonetheless, with a decades-long monitor file of accelerating annual dividends per share, UK shares with a 5% yield are enticing from an revenue perspective, offered the dividends proceed.
And I stay optimistic in regards to the prospects for the British drinks large, with its robust model portfolio, international distribution capabilities, massively worthwhile enterprise mannequin and distinctive and iconic manufacturing website.