Since hitting over 10,900 points, the FTSE 100 fell 9.3% by last week’s close. But we can ignore all the panic headlines calling this a stock market crash. Technically, that would need a 20% loss — so we’re nowhere near it. In fact, the UK’s top shares are only just getting close to a technical correction, or 10% down.

The Footsie has still climbed 14% over the past 12 months, with is around twice its long-term annual average. So is it time to panic? No chance — not after one of the best 12-months period we’ve had for share price gains in recent years.

The Sage of Omaha

Warren Buffett stepped back from Berkshire Hathaway at the end of last year. From his leadership of the company back in 1965 to the end of 2025, he rewarded Berkshire shareholders with an average annual share price gain of 19.7%. That’s some way ahead of the S&P 500 index average, of 10.5% including dividends.

In total, the S&P 500 has compounded up to a 46,000% increase over that period. But the Berkshire share price has trampled on that with a six million percent gain! And that’s through some short-term shocks too. In 2008, for example, the global banking crisis led to a 31.8% fall.

I don’t see Warren Buffett, with that track record, losing any sleep over today’s stock market wobbles. Well, actually, I could maybe picture him kept awake by the excitement of all the great companies now selling at cheaper prices.

“If you aren’t willing to own a stock for 10 years, don’t even think about owning it for 10 minutes,” Buffett famously said. If we buy shares today, where are they likely to be this time in 2036? Think about it like that, and worries about the next few weeks will hopefully fade.

Long-term wealth

The above chart shows the past performance of the iShares Core FTSE 100 UCITS ETF (LSE: ISF). It’s an index tracker fund which aims to replicate the FTSE 100. It charges core annual fees of only 0.07%. And it’s one of the lowest-effort ways to consider getting into stock market investing.

Doesn’t the latest dip look small compared to its five-years gains? Now, if we click the ‘All’ button, we can see a long-term upwards trend — punctuated by ups and downs along the way. On that timescale, we can barely even make out the latest March 2026 dip.

The 2008 financial crisis is the scariest part of it — and it shows even an index tracker like this is exposed to risk of losses. But the stock market has since shaken even that off, and today is considerably higher.

A tracker is never going to beat the market. But we can always add to it by considering shares in great companies at good prices during any dips — just like Warren Buffett has always urged us to do.

The post What might Warren Buffett think about today’s stock market? appeared first on The Motley Fool UK.

Top Cash ISA rates are around 4.6%. That beats inflation, and a return’s guaranteed for the terms of any deal. It sounds great for a bit of cash savings, or for folks who don’t want any stock market risk at all.

But an ISA allowance of £20,000 today could grow to over £49,000 in 20 years. And it could then generate £2,260 annual passive income. But it would depend on reinvesting the interest each year, and we’d need Cash ISA rates to stay this high over the long term. When the Bank of England lowers base rates further, there’s surely little chance of that happening.

Better deal from shares?

FTSE 100 returns have averaged 6.9% over the past 20 years. So what might that get us? What about the same £20,000 invested in the iShares Core FTSE 100 UCITS ETF (LSE: ISF) tracker fund?

That aims to replicate the FTSE 100‘s performance. And if it succeeds — which it’s been doing quite nicely — it could turn £20,000 into around £76,000 in the same 20 years. The extra 2.3% could mean a difference of more than 55% in the long term.

After the two decades, we could be looking at a passive income of over £5,200 a year. That’s more than twice the income we saw from cash. Similarly, we’d need to reinvest any dividends we earn each year.

It also depends on the Footsie managing to maintain its returns. And the tracker maintaining a close match. But the past 20-year average is in-keeping with the UK stock market’s long-term results going back a century and more. So I reckon FTSE 100 index tracker returns have a better chance of being maintained than Cash ISA returns.

Investors might want to go 50/50 with a FTSE 250 tracker to spread the risk, which inevitably comes with any stock market investment.

Even better again?

We must have a good chance of beating that with something like Legal & General (LSE: LGEN). The first thing to notice from the above chart is that Legal & General shares have badly lagged the FTSE 100 over five years. But the further back we check, the better the record looks.

The big attraction is a forecast 8.9% dividend yield. That could turn a one-off £20,000 ISA investment into £110,000 in 20 years. And then pay an annual passive income of £9,800. Any share price gains would be a bonus.

Do I suggest putting all the eggs into the Legal & General basket? Absolutely, no. The insurance business can be very volatile, and the risk isn’t insignificant. Also, dividends aren’t remotely guaranteed.

But as part of a well-diversified ISA based on a strategy of seeking high-yield stocks, it has to be one to consider, right?

The post How much passive income could £20,000 in an ISA grow to? It could be quite a bit appeared first on The Motley Fool UK.

Use the full allowance, never take any money out, buy the best stocks, reinvest all our income… blah-di-blah… I’m not going to trot all that out again. (Well, it makes sense, but we’ve heard it all before.)

Let’s be honest, most of us aren’t going to become millionaires. And I’m here to tell you that’s fine… all the millionaire blather is completely missing the point.

The other 99.9%

UK investors contributed to 4.1m Stocks and Shares ISAs in the 2023-24 year. And only slightly more than 0.1% of those, at most, could have a million in their account.

But a Stocks and Shares ISA isn’t a million-or-bust thing, and it’s not about hitting the ranks of the super-rich. At least, not for the other 99.9% of us. No, for us it’s about making our retirement as comfortable as we can, by investing a reasonable amount of our income.

We want to do better than we would without an ISA. And I reckon almost all of us should be able to achieve that — and it would be tax-free.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

Reality, please

The average 2025 annual UK salary, after tax, was around £30,000. And we’re being urged to max out our annual ISA limit, when very few of us can come close?

What about investing a tenth of the average income, or £3,000 per year? The FTSE 100 has returned an annual average of 6.9% over the past 20 years. At that rate, we could end up with £126,000 in our ISA in 20 years. Or £288,000 if we keep going for 30 years. And that’s not to be sniffed at.

Future returns might not be the same. But the UK stock market has more than a century-long record of beating other investments. One straightforward way to get in is with an index tracker like the iShares Core FTSE 100 UCITS ETF (LSE: ISF)… big name, simple thing.

Buy the biggest

The tracker aims to replicate the performance of the whole index. It’s like buying shares in AstraZeneca, HSBC Holdings, Shell… and all the other big ones. We can do it with just one single investment, and with very low charges the fund comes very close to its FTSE 100 target.

It’s also an investment that, for me, provides the most important thing for Stocks and Shares ISA newcomers. That’s not finding the flashiest get-rick-quick hopes. No, it’s providing diversification. Billionaire investor Warren Buffett’s famous Rule No 1: Never lose money.

Moving on

Buying this tracker does mean we’re not going to beat the market. And we’d suffer from any market-wide falls. So maybe then think about more focused investment trusts, and individual company shares after that.

But yes, we could achieve a lot with an ISA, without getting all starry-eyed about millionaire dreams.

The post Hands up, who’s dreaming of a million in a Stocks and Shares ISA? appeared first on The Motley Fool UK.

Both markets are near record highs

On 18 February, the Footsie rose 1.2% to end the day at 10,686 while the Dow also gained 0.3% to sit at 49,662. We can see the recent strong gains in both the iShares Dow Jones Industrial Average ETF (LSE: CIND) and iShares FTSE 100 UCITS ETF (LSE: ISF).

With both indexes rising, it’s tempting to compare them on a head-to-head basis. But I find looking just at the level of an index can be a distraction. The useful question is what investors are paying for earnings, and what they’re getting back in cash in both markets.

Valuation

On paper, there are big ticks for the Footsie over its US index counterpart. The Dow has a price-to-earnings (P/E) ratio of around 25 compared to the Footsie’s 19.5 as I write on 19 February.

That implies the Footsie trades at roughly a 20% discount on trailing earnings, and it’s a similar story on the income side.

The Footsie’s current dividend yield of 2.8% is comfortably ahead of the Dow’s, which tends to sit below 2%.

It’s worth noting that a higher yield doesn’t make one index necessarily better than the other. However, it often suggests a bigger slice of expected returns comes through cash payouts, not rapid earnings growth.

What’s driving the difference?

I think most of the valuation gap can be explained by the make up of each index.

The Footsie leans towards banks, energy, miners, and big, steady multinational companies in healthcare and consumer staples. Those areas can churn out cash and pay chunky dividends, but they’re not usually priced like high-growth stocks.

The Dow, meanwhile, is more of a ‘best of America’ shortlist. It blends big tech, including Microsoft, and healthcare with industrial heavyweights, consumer brands, and financials like Goldman Sachs. So the flavour is different. There’s more of the US growth story in the mix, even if it isn’t just a tech index.

It’s also worth separating the Dow from the wider US headlines. A lot of the excitement has been driven by the tech-focused ‘Magnificent 7’. That can pull valuations higher across the market, even when plenty of other US shares are just ticking along.

Finally, US companies have tended to return cash in a different way to their UK counterparts. Buybacks have often played a bigger role than dividends, which is one reason US indexes can look less generous on yield than the Footsie.

Key takeaways

The Footsie’s lower rating is mostly about sector mix. The large-cap index is more heavily weighted towards banks, energy, and miners, plus steady global earners in the consumer sector.

The Dow follows more of the US growth narrative and provides exposure to top US companies. Each index can provide strong diversification benefits to investors and I think there are great investment opportunities for investors to consider in both.

The post FTSE 100 vs Dow Jones: why the 20% discount? appeared first on The Motley Fool UK.

Could the large-cap index go on to hit 11,000 this year? I think it’s possible – here’s why.

The investment environment is changing

For much of the last decade, the FTSE 100 has struggled. Because investors have been mainly focused on technology and growth stocks (particularly in the US).

The Footsie mainly consists of ‘old economy’ companies like banks, insurers, oil companies, miners, and consumer goods businesses. So it has been ignored by a lot of investors.

However recently, things have started to change. Last year, for example, we saw investors start to move away from the US market and allocate capital to value stocks across Europe – this gave the Footsie a major shot in the arm.

Now investors are starting to focus more on companies that look relatively immune to AI disruption such as Unilever, National Grid, and Rio Tinto. From an investment perspective, these types of businesses offer more certainty than others.

The path to 11,000

Could this latter trend send the index to 11,000 this year? Possibly.

There are a lot of these types of companies in the index. Some others worth highlighting include Shell, BAE Systems, and Tesco.

Note that right now, the index sits near 10,470. So to get to 11,000 it would only need to rise about 5% from here.

That’s not a huge ask. If companies at the top of the index (with the largest weightings) continue to move higher, it could be an achievable target.

Investing in the FTSE 100

Now, if an investor is bullish on the FTSE 100, they have several options. One option is to invest in a FTSE 100 tracker fund.

An example of such a fund that could be worth considering is the iShares Core FTSE 100 UCITS ETF (LSE: ISF). This is a simple index fund that aims to track the FTSE 100.

With this exchange-traded fund, an investor can get exposure to the index at a very low cost. Ongoing fees are only 0.07% (investors may also need to pay trading commissions and platform charges depending on their broker).

It’s worth noting that this particular tracker fund pays out dividends received from the underlying FTSE 100 constituents to investors. At present, the dividend yield is a little under 3%.

Some other tracker funds reinvest dividends. This makes it easier for an investor to compound their profits.

Of course, the downside to this product is that an investor is never going to beat the index. Meanwhile, if the Footsie delivers disappointing returns (which it could), this product will too.

That brings me to the next option that investors have. And that’s buying a number of high-quality FTSE 100 shares.

This approach requires more time and effort than just buying a tracker fund. And it’s also riskier as each stock is going to have its own issues.

However, there’s potential for larger gains with this approach. Pick the right stocks, and the rewards can be fantastic.

Just ask anyone who invested in Rolls-Royce three years ago. Over that timeframe, it has returned more than 1,000%!

The post How the FTSE 100 index could hit 11,000 in 2026 appeared first on The Motley Fool UK.

And every year there’s a last-minute rush, as people try to use as much of the year’s limit as they can. Once the cash is transferred in, we don’t need to rush to buy shares with it. But that doesn’t stop us getting stressed about what kind of strategy to pursue and which shares to buy.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

And relax…

So why not start planning during the Christmas and New Year holiday season? For those wanting to start a new ISA in particular, it can be worth getting ready well in advance of the April starting gun.

I think it’s worth taking a moment to mention Cash ISAs here. Returns have been reasonable over the past few years of high interest rates. But they’re sure to drop when inflation gets back closer to the Bank of England’s 2% target. And the November budget slashed the Cash ISA limit starting 2027.

Over the long term, the UK stock market has beaten returns from Cash ISAs. But I rate a Cash ISA as ideal for keeping some short-term cash. And some people simply don’t want any stock market risk at all. Unlike shares, Cash ISA returns are at least guaranteed.

Stocks and Shares ISA

We face well over 1,000 companies on the UK stock market, plus a whole host of eligible overseas ones, so how can we hope to narrow them down?

There is, thankfully, an option that requires no research. Don’t have any particular shares in mind, but want to get in on some stock market action? Consider buying an index tracker fund, like the iShares Core FTSE 100 UCITS ETF (LSE: ISF).

It’s an exchange-traded fund, so we can buy shares in it just like any other UK stock. And it aims to match the capital and income returns of the whole FTSE 100. So far it’s been hitting that goal very closely, and the annual charges are some of the lowest in the business.

If it should match the past 20-year average FTSE 100 returns of 6.9% a year, what might that mean? A single full-year ISA allowance of £20,000 invested and left for 20 years could grow into £76,000, without adding a single extra penny.

Or consider a more modest £500 a month for a total of £6,000 a year. Keep doing that for 20 years and it could mount up to as much as £250,000. How much we can afford, and how often we can contribute, varies widely from person to person.

Next steps

We’ll still face general stock market risk. And I’d be wary of trusting all my money to the management of just one company. Other providers include Vanguard, with funds also tracking global stock markets like the S&P 500 in the US. Then there’s Invesco, HSBC Holdings…

Whichever we choose, I reckon an index tracker is a great way to start an ISA. And then we can take our time to think about expanding to investment trusts and individual stocks.

The post Worked out a Stocks and Shares ISA strategy for 2026 yet? Maybe get started now appeared first on The Motley Fool UK.

I’m building a diversified collection of UK stocks in my Stocks and Shares ISA myself. However successful I am, I won’t have to pay tax when I withdraw money.

If I make a million, there won’t be a single penny to pay to the inland revenue. If I pick a few lemons along the way and don’t do so well? At least the tax-free nature of my second income will be a consolation.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

Stock market returns

Over the past 20 years, the FTSE 100 has produced an average annualised return of 6.9%. When we consider that period covers the banking crash, Brexit, the Covid pandemic… it shows UK companies can be remarkably resilient. And I reckon it can pay to be a part owner of a selection of them.

Starting out, it might sound hard to get it right. But you don’t have to pick your own individual stocks the way I do. There’s a straightforward way to get going.

It’s to buy a FTSE 100 index tracker fund, like the iShares Core FTSE 100 UCITS ETF (LSE: ISF). Big name, simple concept — it invests to try to match the index returns. It’s been doing well at it, with low tracking errors. And super low annual charges means we can hope to get very close.

What do we need?

To get to the £12,000 per year income we’re talking about, there are different approaches.

One is to assume the tracker produces the same 6.9% total annual return — and then take that all as income. Part of it comes from share price rises, so it would mean taking out some capital. But depending on what other income and investments we might have at the time, it can make sense.

An investment pot of around £174,000 would produce the needed income at that return. And someone who could invest £500 per month could get there in a bit over 16 years.

Preserve some capital

Another approach is to take out the equivalent of FTSE 100 dividends — the long-term average is close to 4% per year. And then keep the rest in the pot. Someone who goes for that would need a bit over £300,000, which is a lot of money. But at the rates we’re assuming here, it could still be achievable in 22 years.

For a lot of investors, even into their forties and beyond, that’s definitely a feasible timescale. And for younger people with 40 years or so of expected working lives ahead of them… well, the possibility of becoming an ISA millionaire by retirement is a real one.

Different courses

Things are different for everyone. Invest more for less time, smaller amounts for longer, whatever we can afford… the real secret is to try to maximise both. I think investors should diversify further as they gain experience — but the iShares tracker is a good one to consider for starting out.

The post How much do we need in an ISA to aim for a £1,000 monthly second income? appeared first on The Motley Fool UK.

Step 1: Choose stocks and shares

Investing in the stock market won’t be for everyone — it depends on individual circumstances. But I see compelling reasons why we should at least consider it.

Analysts forecast a total dividend payout of £80.4bn from the FTSE 100 this year. That’s the rough equivalent of £1,160 for everyone in the UK. And it all goes into the pockets of the minority who own dividend shares.

FTSE 100 companies have also announced more than £40bn in share buybacks so far in 2025 — and it could go higher by the end of the year. That won’t give us cash directly, but it should boost per-share payouts in future years with fewer shares to split the cash.

In percentage terms, we’re looking at a forecast Footsie dividend yield of 3.5%. What about share price gains? We can’t predict that. But total FTSE 100 returns (share prices plus dividends) have averaged 6.9% a year over the past 20 years.

Step 2: Check the possibilities

Let’s look at the iShares Core FTSE 100 UCITS ETF (LSE: ISF). That’s an exchange-traded fund (which just means we can buy and sell it like any other stock). And its aim is to track the FTSE 100. Yes, that means with a single investment we can bag a stake in every company listed on the top London index.

There’s a standing charge of less than 0.1% a year. So let’s assume the Footise continues its past performance — not guaranteed, but I think we’re fine for ‘What if?’ purposes — and our tracker fund generates 6.8% a year.

The Stocks and Shares ISA allowance currently stands at £20,000 a year. Someone who can afford to invest that much every year could end with a pot of £830,000 after 20 years — more than double what they put in. And just an extra 10 years could more than double that to £1.8m — that’s how the effect of compounding can accelerate.

This assumes the FTSE 100 and the iShares Core FTSE 100 continue their past performance, which can’t be guaranteed — but there’s more than a century of outstanding stock market history behind it.

Step 3: Put up the cash

Opening a Stocks and Shares ISA is pretty straightforward. And then we’re left with seeing how much we can actually invest — few can manage the full £20k. But even someone who can invest £5,000 a year could still end up with more than £470,000 in 30 years at these rates.

I must end on a caution. Even a tracker faces overall stock market risk — like the 2020 crash. But the market tends to recover fairly quickly. And the iShares Core FTSE 100 is managed by a single company — and things can go wrong with even the best of them.

But I think it’s a great one to consider for starting a new ISA. And I’ve branched out into investment trusts myself. They still spread our cash, just targeting a specific goal — like dividends — rather than the whole index. And the longer we can invest the more we should even out the risk.

The post 3 steps to aim for passive income heaven appeared first on The Motley Fool UK.

Saving tax isn’t much good if the investment performance is poor, like the puny long-term returns from Cash ISAs. They can be great for short-term cash — but as long-term passive income vehicles, I rule them out of my plans.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

I do think we need to take some risk. And for me that risk comes in the form of shares on the UK stock market.

How risky?

Barclays used to publish a free annual study looking at past returns of UK stocks, cash and gilts. It showed UK shares have beaten other forms of investment hands down for more than a century.

Over short periods, cash turned out better — the 2020 stock market crash is an example. But the longer the study extended its rolling periods, the more a pattern of stocks outperformance emerged. Over 18-year periods, stocks didn’t lose out to cash even once.

Got a 20-year investing horizon? That’s long enough for me to think the diminishing risk of stocks and shares is worth taking.

How might we get to £3,000 a month, or £36,000 a year? Over the past 20 years, FTSE 100 total returns have averaged 6.9% a year. If that continues, we’d need a pot of around £520,000.

Some years will provide better returns, some years poorer returns. But we can vary the amount of dividends we take and shares we sell to try to even it out.

Buy the index?

Investing in an index tracker fund, like the iShares Core FTSE 100 UCITS ETF (LSE: ISF) is a popular way to spread the risk through diversification. It has a long name, but that belies its simplicity. It invests in a range of stocks to aim to reproduce the FTSE 100 performance, and it gets pretty close.

If we knock 0.1% off the annual return to allow for management charges, how soon could we reach the half a million pounds we’re aiming for?

If we can invest the full £20,000 annual ISA allowance each year, we could get there in about 15 or 16 years. The power of compounding really can turn total investments of £300,000 into more than £500,000. But if we can keep going longer, it gets better.

Continuing for just another five years, we could hit a storming £830,000. And that could smash through our target income and hit £4,700 a month.

Of course, with less money to invest it will take longer, sometimes a lot longer, so starting early is always a good thing.

Would I put all my money in the iShares Core FTSE 100 fund? It’s still a single investment managed by a single company. And that adds a bit more risk on top of the general stock market risk — we already need to allow for something like that 2020 crash, remember.

I’d build on it with other trackers, investment trusts, and individual shares. But the (not so secret) secret is to invest as much as we can, for as long as we can.

The post How much do you need in a Stocks and Shares ISA to target a £3,000 monthly passive income? appeared first on The Motley Fool UK.

No, we really don’t. So follow along with me as I work out what we might hope to achieve with just £10 per day.

There’s one thing we have to be honest about — it’s going to take some time. But it can be surprising how nicely compound returns can build up over the years.

I’d probably save my daily tenner and send over a month’s worth at a time to my ISA. I go for around £1,000 for each investment, to keep trading costs down. So I’d expect to buy some shares every three months or so.

What to buy?

Beginners often start with an index tracker like the iShares Core FTSE 100 UCITS ETF (LSE: ISF), which provides essential diversification. I also favour things like the City of London Investment Trust — it goes for a smaller group of stocks, and has raised its dividend for 58 years in a row.

Investments like these can keep us going nicely while we develop a strategy for individual stocks.

The FTSE 100 has produced an average annual return of 6.9% over the past 20 years. I’d expect the iShares Core FTSE 100 to come close to future FTSE 100 returns, minus its small annual management charge of less than 0.1%. So let’s say 6.8% — not a prediction, just an example to work with.

What’s it worth?

The chart above shows we have to expect volatility, especially in the short term. I wonder how many investors panicked over that July Trump tariff dip?

Look back further, and the index tracker suffered exactly like the entire market in the Covid crash of 2020 — because it effectively is almost the entire market. So while a tracker gives some safety in diversification, it’s still open to stock market risk. But the chart also shows that the longer the timescale we look at, the more we see the ups and downs even out.

I’ll assume the FTSE 100 matches its past performance, though that’s clearly not guaranteed. After 10 years we could have invested £36,500 (forgetting about leap years for simplicity). At 6.8% per year reinvested, we could see it grow into almost £51,800. And that could then generate about £3,500 per year in passive income at 6.8%.

It gets better

After another 10 years we could see our pot triple to over £150,000. And that could earn £10,300 per year. Doubling the time could treble the results.

After a third decade, our pot could soar to £340,000 — and our passive income to £23,400 per year. Isn’t it amazing the way the extra years can compound up so much?

None of this is guaranteed. And an index tracker like this could lose money in the next downturn. But the UK stock market has beaten other investments for more than a century. And numbers like these inspire me to invest as much as I can for as long as I can.

The post How much passive income could we earn from UK shares with just £10 per day? appeared first on The Motley Fool UK.