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Wednesday, February 4, 2026

The £5,000 you invested in the FTSE 100 a year ago is now worth…

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Thus far, 2026 has been a great yr for the inventory market. of FTSE100 The inventory index of main British corporations has hit a brand new all-time excessive.

Some folks choose the concept of ​​so-called passive investing. This implies shopping for shares in funds that broadly mirror or ‘observe’ the efficiency of an index such because the FTSE 100. Therefore the identify “index tracker”.

Given the robust efficiency of the FTSE 100 over the previous yr, this might have been a positive strategy.

vital value enhance

Over the previous 12 months, the FTSE 100 has elevated in worth by 19.6%. Which means the £5,000 you invested a yr in the past is now price round £5,980.

Not solely that, however there would have been dividends alongside the way in which.

The yield on the FTSE 100 is 2.9%. Those that invested a yr in the past would have earned a better yield as a result of their buy value was decrease (yield is a operate of the dividends earned annually and the quantity they pay for the inventory).

So should you invested £5,000 within the FTSE 100 a yr in the past, it is best to have acquired a dividend of round £174.

Index trackers often cost some quantity of charges, which may eat into your earnings.

Nevertheless, there are such a lot of passive traders available in the market that competitors is rising. Due to this fact, in some instances these charges might be fairly small.

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do not buy index

The FTSE 100 had a great yr, however not all 100 corporations inside it did properly.

Actually, such blended efficiency helps clarify why I do not personal index-tracking shares.

I choose lively investing to “shopping for an index.” In different phrases, I purchase a mix of particular person shares that I imagine are attractively valued relative to their long-term business prospects.

The share of blue-chip corporations has declined

For instance, one of many shares I personal is: JD Sports activities (LSE: JD).

Though it’s a member of the FTSE 100, its efficiency has lately differed considerably from the broader index. The inventory value has fallen 4% within the final 12 months.

There are causes for this, together with the revenue warning issued final January. Shopper sentiment is at the moment fairly weak, which may cut back demand for costly sportswear and sneakers.

The corporate’s efficiency in recent times displays its spending on enlargement. Though gross sales elevated by 9% final yr, internet revenue truly decreased.

My hope is that whereas the long-term advantages of enlargement develop into extra obvious, prices within the rearview mirror may imply elevated earnings.

With that in thoughts, I believe the present JD Sports activities inventory value seems to be low cost on a penny-by-penny foundation.

The dividend shouldn’t be price mentioning, simply over 1%. Nevertheless, the corporate’s money technology may additionally imply larger dividends over time.

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