If I was looking to invest £1k today, I’d think myself lucky. Following the stock market crash, there are plenty of bargains to be found on the FTSE 100. The biggest problem might be deciding which dirt-cheap share to buy, given the choice out there.
One issue I wouldn’t worry about is whether the stock market rally is set to continue, as Covid-19 vaccination programmes are put in place. While we all want the pandemic to be over as quickly as possible, what happens in the next few months shouldn’t affect how you invest £1k today.
You should be investing your £1k for a minimum five years and, ideally 20, 30, or 40 years. Over such a lengthy period, today’s number one worry will one day seem like a blip.
Tempting FTSE 100 shares
If I was looking to invest £1k today, or any other sum, I’d spend more time wondering which sector to target.
Should I make a beeline for shares that have been hit hardest by the pandemic, such as airlines, cruise operators, pub chains, hotels and oil & gas firms? Or should I look for stocks that have done well out of the last six months? Or, to put it another way, should I buy dirt-cheap Cineworld, or expensive Ocado Group?
I like to think of myself as a contrarian investor, one who loves picking up shares when they’re cheap, with the aim of holding them for the long run. However, I’m wary of companies such as budget airline operator easyJet and jet engine manufacturer Rolls-Royce Group. Both have surged since Pfizer‘s vaccine news broke on 9 November, but things could get tougher going forward. Their businesses have taken a severe hit. They’re not as cheap as they were. The recovery will be bumpy.
On the other hand, I’d shun lockdown winners. Food delivery companies such as Ocado and Just Eat Takeaway have climbed strongly as orders grew, and could suffer as people rush to eat out again next year. They’re too expensive for me.
Here’s how I’d invest my £1k today
If investing £1k in today’s market, I’d target top FTSE 100 companies with strong and stable future. Pharmaceutical giants AstraZeneca and GlaxoSmithKline would be high on my list, for income and growth. So would consumer companies with a broad portfolio of everyday branded products and loyal customers, notably Reckitt Benckiser Group and Unilever, as well as spirits giant Diageo.
US tech stocks have thrashed all-comers. I’d consider investing my £1k in FTSE 100 winners of the future such as Experian, Relx and Sage Group. I think UK shares could start playing catch-up if, and when, Brexit is resolved.
There’s a lot of choice out there. Whichever stock I buy, I’ll be holding it for the long term, to give my money time to grow. Then I’d start planning my next £1k investment. The more money you invest, the better your chances of achieving financial freedom, and possibly even retiring early.
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Harvey Jones has no position in any of the shares mentioned. The Motley Fool UK has recommended Diageo, Experian, GlaxoSmithKline, RELX, Sage Group, 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.