If I compare the FTSE 100 price now to where it was a year ago, the index is basically flat at around 7,500 points. One of my aims as an investor is to become a millionaire, ideally utilising the benefits of investing in my Stocks & Shares ISA.
Yet if the index hasn’t really shifted in the past year, is it still realistic to have this aim going forward?
Being mindful of past performance
I often hear the financial disclaimer that “past performance is no guarantee of future returns”. Usually this is used to calm investors down, and warn them that the strong gains that an asset had historically might not continue. Yet it also applies in this situation, when some might conclude that there’s little growth potential in FTSE 100 stocks.
Over the past year, we’ve had to contend with high inflation, a war in Eastern Europe, rising interest rates, and much more. All of these factors are negative for the stock market. It’s quite logical that during this time frame, I shouldn’t expect to see large gains in my ISA.
Yet this doesn’t influence my future returns. The market has now taken into account the bad news from last year. The question is, what does 2023 and beyond look like?
For example, the latest Bank of England growth forecasts released yesterday look more positive than many expected. Next year could see an accelerated growth path on the basis of lower inflation and continued high employment. If this happens, I’d expect the FTSE 100 to move higher.
How I can make money in any market
On this basis, I’m going to continue to invest in growth stocks that I feel can appreciate over time. In this way, my ISA value should grow and in decades to come, could reach £1m.
Yet even if the market stays flat, I can still grow my pot. For example, I can buy top dividend shares that offer me an attractive yield. There are a dozen FTSE 100 stocks right now that have a minimum yield of 7%. So even if the share price doesn’t really move, I can bank this 7% and reinvest it to generate further profits.
Even if stocks fall over the next year, I’m not going to panic. Given the maximum yearly allowance for my ISA is £20k, it’s going to take me many years before I can start to think about millionaire status anyway. This is good because it allows time to pass for the market to recover. Then during the economic boom years, my ISA should make up for ground lost during recessionary periods.
Nothing worth having comes easily
Granted, it’s not going to be easy to become an ISA millionaire. There are lots of things that can go wrong along the way. It’s also not just about the market, but about my own self-discipline over time. Yet I think it’s clear that regardless of how stocks are performing right now, there are strategies I can implement to aim for profit.
