With no money in the bank, I’d use these FTSE 100 stocks to build wealth

Jon Smith explains how he’d focus on artificial intelligence and the banking sector when picking FTSE 100 stocks for long-term gains.

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Having little or no money in the bank isn’t the best position to be in. However, it doesn’t mean I can’t look to change things and start to build an investment portfolio with FTSE 100 stocks. It’s true that the best time to start investing was 20 years ago, but the next best time is right now.

Starting with the basics

Before I get into specific areas and stocks I’d pick, I’d first need to fix my cash flow. If I don’t have money in the bank, I need to either adjust my spending or income levels to free up money to invest. Given that earning more is much easier said than done, I’d turn to my spending habits.

Of course, I can’t cut back on essentials and bills. But I can trim my eating and drinking needs/habits alongside other similar expenditure. It might not be that fun for a while, but the financial benefits further down the line would outweigh this.

As a result, I should be left with a positive balance at the end of each month that I can then use to buy shares with.

Areas I’d focus on

For the first few months, I’d focus on building my portfolio around tech and artificial intelligence (AI) stocks. Over the course of the next decade, I see these as being the largest growth areas in the stock market.

However, I’d actually avoid buying the major US AI stocks right now. These have already jumped significantly in value, so I’d prefer to look for different options closer to home.

Apart from this area, I’d also put some of my money in the banking sector. When I’m looking at building long-term wealth from reliable businesses, it’s tough to bet against banks.

Again, I’d be selective in choosing the particular stocks. For example, I bought Barclays shares last month because they looked incredibly undervalued to me. Since then, I’m up over 15%. Yet I still feel that in the coming few years, there’s a lot further for the stock to rally.

Something to get me started

As an example of an AI-related FTSE 100 stock I’d consider buying, I’d pick 3i Group (LSE:III). Over the past year the stock’s up 66%.

Granted, the private equity giant might not be the first choice that comes to mind. Yet think again at what the company does. It invests in unlisted companies (not yet on the stock market) it feels could appreciate in value. As a result, it has stakes in firms such as Digital Barriers and MAIT Group, both companies that use AI a lot.

Therefore, the 3i portfolio contains AI-related stocks I’d normally be unable to buy as a retail investor. This makes it a really interesting company to consider.

Granted, the risk is that with an estimated net asset value of £2bn, the exposure to these companies might not move the needle overall. Yet I think that 3i could increase the funding to this area, as I’m not the only one that believes AI is the future.

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.

Jon Smith has shares in Barclays Plc. The Motley Fool UK has recommended Barclays Plc. 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.

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