The Motley Fool

Could the FTSE 100 make you a million in 2018?

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.

Last year was a particularly strong one for the FTSE 100. It gained almost 7% and in doing so reached record highs. With its dividend yield of almost 4% added to its capital growth figure, the total return provided by the index was around 11%. That’s approximately 50% higher than its expected annual return.

Looking ahead, the index faces a number of political and economic challenges. Brexit is moving closer, global economic risks remain and the UK’s uncertain political outlook could cause investor sentiment to decline. However, with what seems to be a low valuation and a lack of appeal of other major asset categories, the FTSE 100 could rise yet further.

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...

Low valuation

With a dividend yield of 4%, the index appears to be relatively cheap at the present time. This figure is towards the upper end of its historic dividend yield range and means that even though it recently hit an all-time high, there could be further upside ahead.

Compared to other global indices, the FTSE 100 also appears to be cheap. The S&P 500 has risen significantly more than its UK peer, gaining 18% in the last year. This means it has a dividend yield of just 2% at the present time. In theory, this could mean that the FTSE 100 could double before being as expensive as the S&P 500. As such, there could still be significant upside potential ahead.

Relative appeal

Shares could also continue to be popular due to their relative appeal versus other assets. For example, bonds may offer limited upside potential due to the prospects for a higher interest rate in future. While the Bank of England may decide to adopt a loose monetary policy in the short run, higher inflation and continued GDP growth may mean that a higher interest rate is warranted over the medium term. This could cause bond prices to decline as bond yields move higher to compete with higher interest rates.

Similarly, property remains a difficult asset in which to invest directly. Tax changes and the risk of void periods mean that many investors may wish to remain fully invested in shares. And with the availability of buy-to-let mortgages becoming less widespread, buying and renting out a property could become increasingly difficult.

Uncertain outlook

Of course, the FTSE 100’s future may be highly volatile. As mentioned, Brexit is only a matter of months away and political risk in the US and in the UK could cause investor sentiment to decline. However, this year could see further gains for the index due to its low valuation and its high appeal versus other major asset categories.

As such, now appears to be a perfect time to buy it – even though it is trading at a record high. While it will not make anyone a millionaire in the short run, in the long run it could significantly boost your portfolio’s performance.

5 Stocks For Trying To Build Wealth After 50

Markets around the world are reeling from the coronavirus pandemic…

And with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be daunting prospect during such unprecedented times.

Fortunately, The Motley Fool is here to help: our UK Chief Investment Officer and his analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global lock-down…

You see, here at The Motley Fool we don’t believe “over-trading” is the right path to financial freedom in retirement; instead, we advocate buying and holding (for AT LEAST three to five years) 15 or more quality companies, with shareholder-focused management teams at the helm.

That’s why we’re sharing the names of all five of these companies in a special investing report that you can download today for FREE. If you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio, and that you can consider building a position in all five right away.

Click here to claim your free copy of this special investing report now!

Peter Stephens has no position in any 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.

Our 6 'Best Buys Now' Shares

Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply click below to discover how you can take advantage of this.