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Already this 12 months, FTSE100 The UK’s major inventory indexes have hit new all-time highs. The variety of instances exceeded 10,000 for the primary time in historical past.
Over the previous 5 years, the FTSE 100 has elevated in worth by 51%.
So if somebody invested £1,000 at the moment, what would they be sitting on in a 12 months’s time?
What influences inventory market returns
The reply to that query will depend on three components. One is inventory value actions, which we’ll focus on later.
The second is dividends. For the time being, the FTSE 100 has a dividend yield of two.9%. So somebody who invested £1,000 ought to earn round £29 in dividends over the subsequent 12 months.
Dividends are by no means assured, so the precise quantity could possibly be larger or decrease, however as a tough indicator of what to anticipate, we predict the present FTSE 100 yield is a helpful start line.
The third issue that drives returns is stockbroking commissions, prices, and commissions. These could seem small, however they weigh in your backside line even on a one-year foundation, not to mention in the long term.
So it is sensible to search for an appropriate inventory buying and selling account, shares and shares ISA or buying and selling app.
Dig into value fluctuations
Footsie’s development of 51% over the previous 5 years implies that the £1,000 you invested again then is now price round £1,510, even earlier than dividends are taken under consideration. However what is going to occur to the index over the subsequent 12 months?
The primary few days of 2026 have been good. Final 12 months’s efficiency (+22%) reveals that the index can carry out nicely even throughout financial downturns. A part of the reason being that, though the FTSE 100 is made up of corporations listed in London, a good portion of its income is generated abroad.
What is going to occur in 2026?
Given the weak UK economic system and geopolitical uncertainty, I believe it’s unlikely that final 12 months’s efficiency can be repeated over the subsequent 12 months. But when that occurs, £1,000 could possibly be price greater than £1,200 in a 12 months’s time.
Extra optimistically, what occurs if geopolitical considerations recede and the world goes into development mode? Then maybe the FTSE 100 might do even higher than final 12 months.
Nonetheless, I believe there’s a danger that the principle index will decline because it has reached file highs in a reasonably fragile economic system. That might scale back the worth of the £1,000 at the moment invested.
Purchase FTSE 100 shares
Nonetheless, personally, I’ve no intention of investing and “shopping for the index.” FTSE100 Tracker Fund. As an alternative, I personal particular person FTSE 100 shares that I believe have worth.
What I have been shopping for for the previous few months is a excessive road bakery chain. gregs (LSE: GRG) is a widely known enterprise, however I believe it’s extremely simple to know.
The inventory value has fallen 21% over the previous 12 months. Considerations about slowing development charges assist clarify that, however I nonetheless assume there are vital development alternatives.
Wage inflation is a danger to profitability.
However with a robust model, confirmed enterprise mannequin, 1000’s of shops, economies of scale and a few distinctive merchandise, I believe Greggs has a long-term profitable components.
I hope that can result in a rise in inventory costs. Promoting at a P/E of simply 12 occasions, FTSE 100 shares look low cost given the potential of their enterprise.