Long-term investing: will the FTSE 100 rally as optimism grows?

With consumer sentiment rising, I think a FTSE 100 rally is likely. I’m following a long-term investing strategy using pound-cost-averaging.

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.

Hand holding pound notes

Image source: Getty Images.

I want to secure my financial future and I think long-term investing is the answer. That’s because over time, good-quality companies reward shareholders and the compounded gains can be significant. The first place I look is the FTSE 100, with its international focus and well-established businesses. Rather than trying to time the market, I regularly invest and try not to worry about the ups and downs. Here’s why I think stock market investing is appealing.

FTSE 100 resilience

With Brexit finally done, after an epic four-year journey, the UK economy is breathing a sigh of relief, despite short-term obstacles. The lockdowns are a huge inconvenience, but with the vaccine rollout under way, investors are feeling hopeful that the temporary disruption will make way for a much stronger future.

5 Stocks For Trying To Build Wealth After 50

One notable billionaire made 99% of his current wealth after his 50th birthday. And here at The Motley Fool, we believe it is NEVER too late to start trying to build your fortune in the stock market. Our expert Motley Fool analyst team have shortlisted 5 companies that they believe could be a great fit for investors aged 50+ trying to build long-term, diversified portfolios.

Click here to claim your free copy now!

Despite a hopeful start to the year, the FTSE 100 has bumped along with no real momentum. However, I believe that’s sure to change once the economy reopens for real. Of course, none of us can be sure that this lockdown will be the last. But with regions emerging gradually and full steam ahead on vaccine rollout, I think there’s reason to be hopeful.

In any case, I think it’s vital to remember the FTSE 100 contains many top-quality companies that will ride out the Covid-19 storm and still be standing far into the future. That’s why I’m happy to invest a regular sum into my Stocks and Shares ISA each month and simply leave it to grow.


If I invest in the same stock or fund each month, this is known as dollar-cost-averaging or pound-cost-averaging. That’s because I’m not timing the market specifically when the price is low, I’m simply committing to buy shares on a set date each month. This means I sometimes pay more or less depending on market sentiment, but over time, the price paid averages out.

Emotional risk in long-term investing

Long-term investing can offer a slow and steady road to riches. Billionaire investors like Warren Buffett and Joel Greenblatt follow a value investing strategy that’s paid off handsomely. But sticking to it is easier said than done. Extreme market volatility can scare investors into making emotionally charged decisions. Either selling at an unnecessary loss or buying duds because they’ve fallen so fast and look cheap.

To get past that, I try to focus on the bigger picture, historically, stocks go up longer than they go down. As long as I’ve picked strong businesses, then there’s no reason to panic when market sentiment plummets.

Compounding raises investment value

If I invest £200 a month at a 5% annual interest rate, then after 20 years I’ll have over £81,000. That’s a nice sum to look forward to. If I can invest more, achieve a higher rate of return and leave it for a longer period, then the compounding effect will be much greater. Of course, I always run the risk that my investment could go down as well as up.

With consumer sentiment rising, confidence in the stock market is growing too. I think there’s good reason to believe the FTSE 100 will rally once we bring the pandemic under control and the country reopens. Before, during and after I’ll happily continue investing towards a brighter financial future using pound-cost-averaging and a long-term investing strategy.

Is this little-known company the next ‘Monster’ IPO?

Right now, this ‘screaming BUY’ stock is trading at a steep discount from its IPO price, but it looks like the sky is the limit in the years ahead.

Because this North American company is the clear leader in its field which is estimated to be worth US$261 BILLION by 2025.

The Motley Fool UK analyst team has just published a comprehensive report that shows you exactly why we believe it has so much upside potential.

But I warn you, you’ll need to act quickly, given how fast this ‘Monster IPO’ is already moving.

Click here to see how you can get a copy of this report for yourself today

Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Tired woman sleeping on London underground
Investing Articles

5 steps to monthly passive income streams of £500

Aiming for regular passive income streams, our writer walks through five key steps he would take.

Read more »

Business people shaking hands
Investing Articles

Director dealings: HSBC, National Grid, Taylor Wimpey

Director dealings can indicate whether a company's doing well. So, here are this week's director dealings from three of the…

Read more »

Passive income text with pin graph chart on business table
Investing Articles

2 lesser-known stocks with 10% dividend yields!

With sky-high inflation, sizeable dividend yields can help my portfolio grow. These two stocks are paying 10% on average.

Read more »

Businessman pulling out wooden brick from toppling stack
Investing Articles

Is the Woodbois share price a bargain – or a value trap?

The Woodbois share price has seen big swings recently. Our writer considers why and explains his response.

Read more »

Electric cars charging in station
Investing Articles

Here’s why NIO stock is my top EV pick!

NIO stock had been one of the worst-performing shares over the last year, but it appears to have bottomed out.…

Read more »

Risk reward ratio / risk management concept
Investing Articles

The JD Wetherspoon share price has fallen 45% — should I load up?

The JD Wetherspoon share price has shed almost half its value in the past year. Should our writer buy another…

Read more »

Light trails from traffic moving down The Mound in central Edinburgh, Scotland during December
Investing Articles

Down 50%, is the Scottish Mortgage share price a bargain in plain sight?

The Scottish Mortgage share price has lost half its value in recent months. Is it now a bargain for our…

Read more »

Smiling young man sitting in cafe and checking messages, with his laptop in front of him.
Investing Articles

A cheap UK share for the cybersecurity boom!

I'm backing this UK share after its share price collapsed this week. In fact, I've recently added this cybersecurity stock…

Read more »