Why FTSE 100 Is Still The Best Place For Your Money

I wouldn’t bet against the FTSE 100 (INDEXFTSE:UKX) in 2014.

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

The FTSE 100 (FTSEINDICES: ^FTSE) has been the victim of some vicious headlines this year. Words like falter, fear, worst, lowest, concern and crisis have been used with abandon.

To date, the index is down 242 points since the beginning of 2014, and breaking news in Ukraine continues at a clip, battering the index on an almost daily basis.

If your money is tied up in the stock market, it’s perhaps understandable that you’ve felt one or two of the above words yourself — fear and concern.

If you’re worried, I’d say that’s a pretty natural inclination. You may also feel the inclination to protect your wealth. That is: avoid the market and save your cash instead.

To that end, I’d implore holding your nerve. There’s no better option than equities, and I’ll explain why.

Gold isn’t the safest haven

goldbarancoinsA long-time favourite of nervous investors seeking a safe haven is gold. Gold was out of favour for most of 2013, as the price of the metal fell 25%. This was gold’s biggest decline since 1981.

The first aspect to gold’s price is basic supply and demand. If there’s more of the stuff than people want then the price falls. The reverse, naturally, is true as well.

But in times of crisis the price soars, as we’ve seen over the course of the past month, with gold hitting a six-month high last week.

The price is volatile, however, and gold has since fallen back as tensions over Ukraine have eased.

Look at it this way

LondonFor comparison’s sake, gold is useful. When you buy gold you’re buying something tangible — it’s heavy, shiny and yellow.

When you invest in the market your purchases might look fuzzy sometimes. Coloured arrows, graphs and charts fly around with abandon.

What it comes down to is this: when you buy shares in the FTSE 100, you’re buying into British business. That’s the main thing you need to know.

Unlike gold, these companies — that you become part-owner of — pay you an income. Moreover, you can spread the risk over a range of different industries.

Right now, shares are affordable

Five years ago, the FTSE 100 fell below 3,500. The banking system was on its knees but since then shares in the taxpayer bailed out banks Lloyds and RBS are up 71% and 40% respectively.

If you were brave enough to buy shares in Barclays your investment would have surged 222%.

As the UK economy recovers, analysts expect the blue-chip index to hit 7,000 as early as mid-April. Before that happens, if you’ve got the nerve, there are attractive blue-chips trading at a deep discount.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Mark does not own shares in any company mentioned.

More on Company Comment

Hand of person putting wood cube block with word VALUE on wooden table
Company Comment

Value has been building behind the Diageo share price

Despite the business growing, the Diageo share price first reached its current level just over 19 months ago and hasn't…

Read more »

Older couple walking in park
Investing Articles

5 stocks to buy for high and rising dividend income

I can see a host of shares to buy on the FTSE 100 offering me exceptional levels of income. Here…

Read more »

Young mixed-race woman looking out of the window with a look of consternation on her face
Investing Articles

I don’t care if FTSE 100 shares fall further, I’m buying them today

I'm happy to go shopping for FTSE 100 shares today, even though I accept that they could have further to…

Read more »

Happy young female stock-picker in a cafe
Investing Articles

Rolls-Royce shares are down 18% in a month and I’m finally going to buy them

Investors who bought Rolls-Royce shares have been repeatedly disappointed, but I'm willing to take a chance on them before they…

Read more »

Storytelling image of a multiethnic senior couple in love - Elderly married couple dating outdoors, love emotions and feelings
Investing Articles

How I’d invest £10k in a Stocks and Shares ISA today

Now looks like a good time to buy cheap FTSE 100 shares inside a Stocks and Shares ISA. These are…

Read more »

Black father holding daughter in a field of cows
Investing Articles

Today’s financial crisis is the perfect moment to buy cheap shares

I'm building a portfolio of FTSE 100 stocks by purchasing cheap shares whenever I see an opportunity. There's a good…

Read more »

Long-term vs short-term investing concept on a staircase
Investing Articles

I’d buy Tesco shares in October to bag their 5.4% yield 

Tesco shares have fallen lately but I think this makes them attractively valued for a dividend stock I would aim…

Read more »

Young mixed-race woman looking out of the window with a look of consternation on her face
Investing Articles

I would do anything to hold Diageo in my portfolio (but I won’t do that)

Diageo is one of my favourite stocks on the entire FTSE 100 and I'd love to hold it, but one…

Read more »