I still think there’s plenty of room for growth in FTSE 100 shares as the UK moves tentatively out of lockdown measures this year. Here are two UK firms I would add to my best stocks to buy now list.

GSK

With a market capitalisation of more than £63bn, pharmaceuticals giant GlaxoSmithKline (LSE:GSK) is one of the biggest companies in the FTSE 100.

GSK’s share price has disappointed investors in recent years though, particularly over the last 12 months as the company’s wider vaccine sales suffered and it seemed to fall behind in developing a Covid vaccine. The shares are down 19% in the last year.

Despite this drop, I see an opportunity to buy GSK shares right now. The company is moving its Covid vaccine through the various trial phases, and demand for this is likely to be strong for years, even after the worst of the pandemic is over.

GSK also has one of the most attractive dividend yields on the index, currently sitting at 6.3%. This would provide me with a decent level of income before factoring in share price fluctuations. 

The group has also said it is to separate its biopharma and consumer healthcare businesses this year, which I think will help to streamline operations.

There are still potential downsides for GSK shares right now though. Its joint vaccine venture with Sanofi isn’t expected to be approved until the end of this year, and the company has also announced it will be changing its dividend structure in 2022, with payouts likely to fall. There’s still uncertainty about how the split in its businesses will also affect the share price.

But I see enough upside to buy GSK shares at the moment.

DGE

Times have been tough for Diageo (LSE:DGE) the maker of Guinness and Johnnie Walker. With bars up and down the country (and globally) shut, lockdown restrictions have led to a challenging environment for the hospitality industry.

Despite that, I have been impressed with how the company has been able to cope during the pandemic. The shares have actually grown 12% in the last 12 months, albeit the shares had already been falling by this point last year.

It’s important to note that Diageo is not just a UK-focused company. It operates in more than 180 countries, many of which haven’t been subject to the same strict lockdowns the UK has seen.

While profits were down by 8% compared to the previous year when the company recently reported its half-year results, I don’t think that’s too damaging considering the wholly different environment the company was operating in. While beer sales have been adversely affected, spirits sales have actually increased due to strong off-trade performance.

There are still headwinds for the Diageo share price though. Potential setbacks to vaccine rollouts in key markets such as the US and Europe could dampen the optimism surrounding the reopening of hospitality venues.

Despite the risk, I’d still add Diageo to my best stocks to buy now list.

The post These FTSE 100 giants are on my best stocks to buy now list appeared first on The Motley Fool UK.

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conorcoyle owns shares of Diageo. The Motley Fool UK has recommended Diageo and GlaxoSmithKline. 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.

Over the last 12 months, the share price growth has been more modest for ITV, but the stock has still grown 18%.

With the broadcasting company releasing its full-year earnings report on Tuesday, I thought it a good time to evaluate whether now is a good time for me to add the shares to my portfolio.

Earnings report

Full-year pre-tax profits for 2020 declined 39% from the previous year to £325m. Revenue was also lower by 16% at £3.26bn as the company dealt with halted production for large periods of 2020 due to Covid 19 restrictions.

ITV said that advertising revenue was 11% lower, and indicated that the advertising environment remains a challenging one for the company. 

However, a promising final quarter of the year helped full-year earnings to beat analyst expectations. ITV warned restrictions in the first quarter of 2021 would lead to declining profits again in Q1, but was optimistic about the relaxing of lockdown measures in the UK.

If all goes to plan with the roadmap announced by the UK government, I think ITV can benefit from more buoyant advertising budgets and will be able to increase content production.

Another reason for me to be bullish on ITV shares is the fact the business has shown an ability to pivot towards a more digital offering. With the expansion of the ITV Hub streaming service and its joint venture with the BBC in the shape of Britbox, I like that the company is diversifying its content offering. ITV now has more than 2.6m subscriptions to its online services worldwide.

Streaming competition

Despite reasons to be positive about the ITV share price, I think there’s still plenty of risk in buying the shares right now.

The company has to deal with a high level of competition, particularly on the digital side of things. Netflix, Amazon Prime, Disney+ and more are here to stay, and there’s always the possibility of further streaming services arriving to eat up market share even further.

I think the shares have suffered a lot due to this over the years. While the ITV share price is up in the last year, its shares are now trading 47% lower than they were five years ago.

Another risk that could weigh on the shares is any potential setback to the UK’s Covid vaccine rollout. Any significant delay could hamper production further for ITV Studios.

Despite these risks, I still see enough value in the ITV share price to buy in today. Its subscriptions and viewing hours continue to rise, and the company continues to innovate with its digital offering. This will be crucial in the years ahead and gives me confidence in the shares.

The post The ITV share price is up 94% in 6 months! Here’s what I’d do now appeared first on The Motley Fool UK.

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conorcoyle has no position in any of the shares mentioned. The Motley Fool UK has recommended ITV. 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.

Stocks and Shares ISAs have a number of tax benefits, with every adult in the UK having a tax-free allowance of £20,000 which they can use in any tax year.

Like many, I may not be able to take full advantage of that allowance, but that doesn’t mean I can’t gain from investing in a Stocks and Shares ISA with just £1,000.

As with any stocks and shares investment, it must be noted that the value of my investment has the potential to fall as well as rise. With that in mind, here’s how I would invest £1,000 in my ISA today.

Household names

One way I would start investing in my Stocks and Shares ISA is through big, reputable UK companies, which I can find in the FTSE 100 and FTSE 250.

These indexes contain some of the longest operating, highest value companies in the UK, and many have historic records of share price growth. It is true that past performance is not an indicator of future performance, but I like to look at household names that have consistently shown profit and share price growth over the years.

UK banks have struggled in the stock market in recent years as economic uncertainty caused by Brexit and Covid-19 has taken its toll. I’d still look to buy finance stocks for my ISA, as I think the economic outlook will improve in the years to come. 

For example, Barclays (LSE: BARC) is one of longest-running companies in the UK. The bank’s share price has bounced back in 2021 as optimism around Covid-19 vaccines grows.

The company reinstated its dividend last month and profits were higher than analysts had expected, although they were lower that in the previous year.

Barclays does have plenty to worry about, though. The company was hit with £4.8bn of impairment charges as a result of Covid-19. The banking sector is fragile right now, and is susceptible to further setbacks if there are more economic woes ahead.

There may be short-term economic turbulence but I see enough value in Barclays shares right now to add to my Stocks and Shares ISA.

Cleaning up

Another company from the Footsie which I would buy for my ISA is Unilever (LSE:ULVR). While the household supplies maker may not itself be a household name, many of its brands are. 

With names such as Domestos and Hellmann’s in its portfolio, there aren’t many people who don’t come into contact with Unilever products regularly.

The Unilever share price has a track record of growth, matched by earnings and dividend growth. The last 12 months have seen an increase in sales of home hygiene products in particular. I think this trend will continue as people will be more conscious about hygiene, even after the Covid-19 threat has subsided.

Unilever shares have seen weakness in the first quarter of 2021 however. Profits have fallen short of analyst expectations recently, and investors may be looking to recovery stocks rather than defensive stocks right now.

While the company may not see a massive turnaround like some companies will as the economy reopens, in the long term I think Unilever can continue to grow and provide returns on investment.

The post How I’d invest £1,000 in a Stocks and Shares ISA today appeared first on The Motley Fool UK.

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conorcoyle has no position in any of the shares mentioned. The Motley Fool UK has recommended Barclays and Unilever. 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.

With UK stock investing, one of the ways I can do this is to look for companies that pay consistent dividends. Dividends are payouts that companies make to shareholders when profits are strong enough and when they’re confident about their outlook.

All companies reinvest in their own growth, but some invest more than others. Many FTSE 100 companies prefer to provide greater payouts to their shareholders.

While there are merits to both approaches, income shares are very popular and today I’m going to look at two UK stocks I’d buy to help me generate passive income through dividends.

Vodafone 

Telecommunications provider Vodafone (LSE:VOD) is one of the most generous in the FTSE 100 when it comes to dividend payments. 

Boasting a yield of 6.3% based on its current share price of 125p, Vodafone has been a favourite of income investors for years.

The company returned to profit growth in its most recent quarter, which encourages me. It’s one of the key players in a market with a high barrier to entry which I also like. 

I’d be happy to invest in Vodafone for passive income generation, but there are risks I’m aware of.

The telecoms giant’s share price performance leaves a lot to be desired. If I look back at its performance over the last year (-11%), two years (-7%) and five years (-43%), it doesn’t have a great record for growth.

Vodafone is also an expensive business to run, considering the infrastructure needed to maintain its telecoms systems. This can hurt profits and could affect the dividend. But on balance, I remain upbeat about its prospects.

SSE

Another UK stock I think could provide me with solid dividend income is energy supplier SSE (LSE:SSE). It’s one of the largest suppliers of electricity and gas in the UK, with an enticing dividend of just over 6% at current prices.

One reason I think SSE would be a good addition to my portfolio is that it’s quite a defensive stock. Despite the economic difficulties of the last year, profits have remained strong as people still need their power supply.

While earnings for its full financial year are expected to be down, earnings per share are still forecast to come in between 85p and 90p. The company has also said it expects to increase its dividend payments as part of a five-year dividend plan.

SSE also committed early to the adoption of renewable energy sources and is one of the leaders in this space already, which offers potential for the future.

Again though, there are risks to be aware of when buying SSE shares. Share price growth has been less than impressive in recent years. 

The price was 1,475p a year ago, but despite a climb to 1,612p on 8 January, the shares retreated to 1,313p on Monday. This may be due to regulatory pressure, after SSE was among a group of energy suppliers slapped on the wrist by Ofgem for overcharging customers.

I don’t see enough of a reason for that fall though. I do see a buying opportunity. Given SSE’s dividend yield, so I’d add it to my portfolio for passive income.

The post UK stock investing: 2 shares I’d buy today for passive income appeared first on The Motley Fool UK.

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conorcoyle has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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.

The onset of the Covid-19 pandemic was the primary cause of the first dip, while further lockdown restrictions coming last autumn also contributed to that second fall.

However, rising oil prices now appear to be driving the BP share price higher. How likely is this rise to continue though? Here’s what I think.

Oil prices

With oil prices falling to bargain basement prices during 2020, the profits of large oil producers such as BP took a hit. That came as demand for oil plummeted due to restrictions on large sections of global economies.

The company said it made a loss of $5.7bn when it posted its annual earnings report last month. That was even wider than the $4.8bn analysts had expected.

That comes in stark contrast to the $10bn profit it made in 2019. That’s a significant change in fortunes and one that BP will be desperate to turn around as soon as possible.

I think the events of the last year will accelerate BP’s move to diversify its energy sources. Some industry observers even think that we may have reached peak oil, and the UK’s push to become carbon neutral by 2050 means renewables will become increasingly important.

BP has already promised major cuts to its oil and gas production by 2030. It will divert that investment towards its target of building renewable energy capacity of 50 gigawatts by that time.

While those targets will be challenging no doubt, BP can count on heavyweight resources and decades of energy expertise to help it meet its goals.

Another reason I think BP might be a good addition to my portfolio is the fact that it pays out a healthy dividend to shareholders. Based on its current share price of 315p, the company’s dividend yield sits at 6.3%. That’s one of the highest payouts among FTSE 100 companies.

Stalling dividend growth

There are also reasons to be bearish on BP shares however. The dividend I referred to previously is unlikely to see growth over the next 12 months at least, due to the underlying performance of the business. So with the effects of inflation, the payout may not be worth as much in a year’s time.

Many investors prefer dividends to increase incrementally based on solid underlying performance.

Another factor I think could weigh on BP shares in the long term is the level of competition within the renewable energy sector. There are plenty of relatively new companies in the UK that have been set up with a sole focus on renewable energy at their core.

BP still has to manage its dependency on oil to strike a balance between profitability and its commitments to reducing emissions. With the competition in the renewables sector, there’s still uncertainty about how much of that market BP will be able to control. 

However I think these are issues that the experience and expertise of BP within the energy sector should help it override. As a result, I see BP shares as a ‘buy’ right now.

The post Here’s what I’d do about the BP share price right now appeared first on The Motley Fool UK.

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conorcoyle has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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.

Following company news is one method I use to look for long-term opportunities for UK shares to buy. Here in the UK, there are a number of headlines in particular that caught my eye today. Based on what is in the news today, here’s one UK share I’d buy and one I’d avoid.

House prices

According to data published by Halifax on Friday, UK house prices fell for the second consecutive month in February. The average price of a property in the UK dropped 0.1% to £251,967. That came after a drop of 0.3% in January.

House prices grew significantly in 2020, despite the economic uncertainty caused by the Covid-19 pandemic. The average price is 5.2% higher than in February last year.

I think that if house prices continue to fall, this may have an negative impact on UK housebuilders, including Taylor Wimpey (LSE:TW.). While the company has posted a series of strong trading updates in recent months, rising property prices have contributed to that.

While the Stamp Duty holiday has been extended, this is due to return to pre-Covid-19 levels in October. This means that anyone who purchases a property from then onwards won’t have to pay tax on the first £125,000, as opposed to the current level of £500,000. Demand could soften as a result.

That said, the UK economy could well be in a much better position by October, offsetting any potential drop in demand. In addition, lending conditions remain favourable for homebuyers at the moment, which could see prices continue to rise further over the next year. 

Until there is a little more clarity about the strength of future UK house price growth, I will avoid buying Taylor Wimpey shares right now.

LSE results

FTSE 100 group London Stock Exchange (LSE:LSE) was also in the news on Friday after it published its full-year earnings report.

While it posted higher full-year profit and sales, the market was not convinced. At the time of writing, LSE shares were down more than 11% on Friday. This doesn’t make sense to me. LSE shares have a strong history of recent growth, with the share price up more than 100% over the last two years.

Some may be confused about LSE’s listing, as it is also the exchange where UK stocks are traded. The company makes money through fees charged for trading on the exchange, as well as information services which are provided on a subscription basis.

LSE’s operating profits for 2020 were 5% higher than the year before, to £209.7m, with adjusted basic earnings per share growth of 7%, to 75p.

The company has said it is well positioned for future growth, and it does not tend to be too badly affected by swings in the UK economy.

That said, as with any stock investment there is risk to buying LSE shares. And, based on its current profits and share price, LSE has a price-to-earnings (P/E) ratio of 47. As a result, the shares are somewhat expensive. Despite that, though, with the share price falling on Friday, I see it as a good opportunity to buy LSE shares.

The post FTSE 100 today: 2 stocks I’d buy on the latest stock market news appeared first on The Motley Fool UK.

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conorcoyle has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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.

Like many travel and leisure stocks, the shares took a beating in the stock market crash which followed the onset of Covid-19. Despite its short-term gains, the Carnival share price has lost 24% of its value over the last 12 months.

With the cruise holiday industry brought to a virtual standstill by global pandemic restrictions, the shares have been buoyed by the rollout of the vaccine program. So where do I see Carnival shares headed over the next few years?

Why is the Carnival share price rising?

For me, the main reason that the shares have seen such a significant recovery recently is simply due to developments in the fight against Covid-19. As Boris Johnson announced tentative measures to ease the lockdown in the UK, investors appear to be optimistic that international travel will be allowed to resume on a larger scale at some point this year.

Carnival has said it hopes to begin operating its cruises again this year. I think realistically it will be closer to 2022 before cruises will be able to operate at something close to normal trading conditions.

As well as that optimism, Carnival also announced last month it would be launching a $1bn share offering of its common stock. The company said it would be using its proceeds from the stock sale for “general corporate purposes”.

I’m not particularly convinced by that statement, although the market appears to have responded well to the stock offering. If I was a shareholder I would want to hear more information about what those “purposes” are.

Struggling finances

As is to be expected, Carnival’s balance sheet has taken quite a battering over the last year. At the beginning of the year the company said its net loss for the most recent quarter was £1.6bn.

While that is clearly an unsustainable figure in the long term, the company added it burnt through slightly less money than expected in the final quarter.

By the end of 2020, Carnival said it had $9.5bn of cash and cash equivalents. It will need to use some of this and perhaps extend credit agreements to see it through 2021. 

While I do see travel and leisure stocks turning the corner this year for the most part, I think the cruise industry still has a way to go. With an older clientele and thousands of holidaymakers canned into one vessel, there could be plenty of difficult days still ahead for the business.

The company has said bookings for the second half of the year are within its historical range. Bookings for the first half of 2022 are higher than the same period in 2019. While that may be true, I fear further cancellations may significantly affect those numbers. I still see too much risk attached to the Carnival share price, and won’t be buying the shares right now.

The post The Carnival share price is booming! Should I invest in the company today? appeared first on The Motley Fool UK.

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conorcoyle has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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.

Looking at FTSE 100 shares, for the most part stocks are still trading lower than they were 12 months ago, just as the pandemic was beginning to take hold in the UK.

There have been signs of a recovery in the last few months, however, with the index gaining 33% since its low of 4,993p in March 2020.

I still think there are some UK shares to buy today which I would add to my Stocks and Shares ISA. UK citizens have an allowance of £20,000 for the tax year in which they can receive with an ISA. 

While there is more risk involved than in a Cash ISA, I think a Stocks and Shares ISA can be a good way to get started in the stock market.

Here’s two shares I’d buy today for my Stocks and Shares ISA.

Rio Tinto

Mining giant Rio Tinto (LSE:RIO) is a company with a strong record of growth over the years. Its share price has gained more than 220% over the last five years.

In a recent trading update, Rio Tinto announced it would be paying out a record dividend of $3.09 per share in addition to a special dividend of 93 cents per share.

The company also said its full-year profits had climbed 22%, as strong demand for iron ore led to an increase in the price of the commodity. 

If the global economy is able to return to some sort of normality over the next 12 months, I think this demand could grow even faster and boost Rio Tinto’s profits and share price even further.

The major risk is that commodity markets such as iron ore can often be cyclical in nature. As Rio Tinto is experiencing significant growth right now based on soaring iron prices, a fall in these prices is certainly possible. 

Intermediate Capital Group

The Intermediate Capital Group (LSE:ICP) share price suffered a decline last week, but the shares have performed solidly in recent years. The stock has gained more than 10% over the last 12 months, while that figure is just short of 70% over the last two years.

The asset manager entered the FTSE 100 after a period of sustained growth, and has continued that form to see its market capitalisation edge over £5bn.

Assets under management, a key measure of growth for those in the sector, have consistently grown for the business. In a January trading update, the company reported total assets under management rose 2% in the three months to 31 December, to €47.2bn.

Intermediate Capital says it is “well positioned to continue this trajectory” and if that is the case I think its share price can also continue to grow. On that basis I would add it to my list of shares to buy today.

Like other financial services firms, the company is subject to economic weakness due to the ongoing Covid-19 pandemic. Its profits have been underwhelming at times over the last few years, so there is a risk to buying the shares right now.

The post 2 shares to buy today for my Stocks and Shares ISA appeared first on The Motley Fool UK.

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conorcoyle has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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.

In fact, while most FTSE 250 companies have seen their share prices struggle over the last 12 months, the Renishaw share price has seen impressive growth. The shares are worth more than double what they were this time last year, rising 102% to today’s price of 6,485p.

But what exactly is Renishaw and what does the company do? The company is not the most well-known among the FTSE 250 despite significant profit and market capitalisation growth in the last few years.

What type of business is Renishaw?

According to the company’s website, Renishaw is a “global, high precision metrology and healthcare technology group”.

Among the company’s innovative product list is precision measurement systems which help manufacturers maximise production output. In a nutshell, Renishaw’s technology helps businesses to automate their production lines.

Renishaw has also been able to apply its technology to the healthcare and science sectors. It has also pioneered a new metal 3D printing innovation.

The business has seen soaring profits in recent times. In its most recent earnings report, Renishaw said its adjusted profit before tax for the six months ended 31 December came in at £43.4m, up from £14.3m in the previous year.

The company said the improved profitability came as a result of its implementation of its ‘Fit for the Future’ strategy, which helped drive productivity and reduce costs.

Why is the Renishaw share price rising?

Renishaw announced on Tuesday it would be putting itself up for sale. Founders Sir David McMurtry and John Deer want to sell their 53% stake in the business.

Both men are in their 80s and in a statement said: “Our thoughts have increasingly turned to considering the future of our shareholdings in the company and how we can actively contribute to securing the future success of the business”.

The board has opened the sale process, but no buyers have initially been indicated. The market clearly responded well to the news, however. The shares shot to the top of the FTSE 250 risers on the day.

With a strong history of profitability and share price growth, many might see the Renishaw share price as a safe investment.

The company is a global leader in its field and operates with huge profit margins. Its founders met while employees at Rolls-Royce, and have strived to ensure Renishaw’s reputation for quality and good management.

With all that said, I still have my doubts about potential returns from buying Renishaw shares right now. Little is known about who may potentially buy the company at this stage and what direction those owners will take Renishaw.

The shares have traditionally been seen by investors as an expensive purchase. Based on its current share price, the shares trade on a current price-to-earnings ratio (P/E) of 135. Tuesday’s bounce may have skewed that figure, but it’s too expensive for me to consider buying the shares today.

I’ll be keeping an eye on the Renishaw share price over the next few months as the sale progresses though, and may revisit in the near future.

The post The Renishaw share price is rising! Should I buy the shares now? appeared first on The Motley Fool UK.

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conorcoyle has no position in any of the shares mentioned. The Motley Fool UK has recommended Renishaw. 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.

Initially I was tempted by the potential returns I could get from a Stocks and Shares ISA. With interest rates at historic lows, savings accounts were becoming less and less worthwhile for me.

Many people have at least thought about buying stocks and shares, but often don’t know how to do it. Or they may think they need to have thousands to spare every month to make it worth their while.

I don’t see it that way. When I started investing, I put a small portion of my salary towards buying UK stocks and funds. This allowed me to see how the market and various investment platforms worked. When I could afford to, I gradually increased my my investments.

Here’s how I would start investing today with just £50 per month.

Index tracker funds

The first move I made towards investing in the stock market was through index tracker funds. If I was starting out again today with £50 a month, I think it would still make sense.

These funds track the performance of indexes such as the FTSE 100 in the UK or the S&P 500 in the US, so I wouldn’t need to actively pick individual companies to invest in.

According to a report from US investment bank Goldman Sachs, historically the average return of the US stock market over 10 years is 9.2%. Despite a major economic crisis as a result of the onset of Covid-19, the UK’s FTSE 100 has gained 10.5% in the last decade. 

Warren Buffett

Famed US investor Warren Buffett is a fan of this investing strategy. “By periodically investing in an index fund, the know-nothing investor can actually out-perform most investment professionals,” Buffett said in John C. Bogle’s book, The Little Book of Common Sense Investing.

Sure, some individual company shares are likely to generate far greater returns over a long-term period. But many won’t. Buying an index tracker fund also gives me a cross-section of the market, as opposed to concentrating my investment in one company, sector or commodity.

While I think that investing in these funds is a more risk-averse way of investing £50 a month in the stock market, it must be said that the value of my investment can always go down. Returns are never guaranteed in the stock market. The last 12 months more than ever have shown that global markets are fragile. The pandemic has shrunk the UK economy by almost 10%.

Another setback in the fight against Covid-19 could potentially lead to a major sell-off, as was seen in February and March 2020. The Footsie lost around 35% of its entire value in just two months at that time.

However, my opinion is that while these global events can hurt the market, I ultimately invest for the long term. When I buy funds or stocks I aim to hold for at least five years or longer to dilute the impact of short-term crashes. That’s why I’d start investing £50 a month in index tracker funds.

The post How I’d start investing with just £50 a month in 2021 appeared first on The Motley Fool UK.

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conorcoyle has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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.