Will the FTSE 100 reach an all-time high this year?

The FTSE 100 has started 2022 strongly. The UK’s largest share index has already climbed almost 100 points since the turn of the year.

So what are the chances that the FTSE 100 will surpass its previous all-time high time at some point in 2022? Let’s take a look.

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How has the FTSE 100 performed recently?

You probably already know that 2020 was a year to forget for the FTSE 100. It was the year when the Covid-19 pandemic sent shockwaves throughout global stock markets. In March 2020, the FTSE 100 shed over 2,000 points as a direct result of investors fearing the mysterious new virus.

Despite plummeting to a low of 5,190 on 20 March 2020, the FTSE rose to a respectable 6,460 by the end of the year. While still a long way off its 7,622 value seen at the start of 2020, this quick, partial recovery came as a welcome relief to many investors.

Last year, it’s fair to say that the FTSE 100 continued its steady recovery. Despite a few hiccups along the way, the FTSE 100 climbed to 7,364 by the end of 2021. This was a mere 300 points below its value at the start of 2020.

Two weeks into 2022 and the FTSE 100 currently stands at 7,595, just a smidgen below its pre-pandemic level. 

Will the FTSE 100 reach a new all-time high in 2022?

If the FTSE 100 continues its current trajectory, then the value of the share index will undoubtedly surpass the 7,622-point mark it reached at the beginning of 2020. Considering the devastating impact of the Covid-19 pandemic on the global economy, many will consider this a remarkable recovery.

However, it’s worth knowing that the FTSE 100’s highest-ever value was reached on 22 May 2018. On this day, almost four years ago, the FTSE 100 stood at 7,877. 

To surpass this figure in 2022, the FTSE 100 would have to gain almost 300 points. As the share index has already climbed over 300 points in the past four weeks alone, optimistic investors will be hoping the FTSE 100 will reach a new high very soon.

Yet it’s worth bearing in mind that this opinion isn’t shared by everyone. According to investment platform AJ Bell, while the FTSE 100 may be in line for a strong 2022, investors shouldn’t bank on the share index reaching a new all-time high. That’s because its latest forecast suggests the FTSE 100 will stand at 7,750 by the end of the year.

While it can be interesting to assess and predict the future performance of the stock market, it’s worth knowing that even investing gods such as Warren Buffett recognise they cannot accurately predict the performance of a stock market, especially over a short time frame. 

In addition, the past performance of a stock should not be used as an indicator of future performance. As a result, it’s always worth approaching any predictions with caution.

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How can you invest in the FTSE 100?

Whatever your expectations of the stock market this year, if you’re looking to invest in the FTSE 100, then there are two ways to do it.

1. Invest in individual companies in the FTSE 100

If you prefer this route, you can invest in individual members of the FTSE 100. To do this, you’ll need to open a share dealing account and choose your stocks accordingly. 

Do remember that the FTSE 100 comprises the 100 biggest companies listed in the UK, so members can fall out of the index. To see the current constituents of the FTSE 100, see the London Stock Exchange website.

2. Invest in a FTSE 100 index tracker fund

If you’d prefer to benefit from the collective performance of the FTSE 100, an index tracker fund is likely your best option.

To do this, you’ll need to find an investing platform, such as the Hargreaves Lansdown Fund and Share Account, and choose the appropriate fund. 

Are you new to investing? If you’re a stock market newbie, then take the time to read The Motley Fool’s investing basics guide. As with any investing, remember that the value of your investments can fall as well as rise.