The stock markets are on a roll. The FTSE 100 index has seen a sharp rise this month. If you are wondering whether you missed the investing boat, let me share a story. It took me a good few years after I first started tracking the stock markets to actually start buying shares.
The reason for this was my hesitation — when the markets were rising, I was afraid they’ll start falling. When they were falling, I was afraid they’d fall further. But that was only while I thought of all publicly listed companies as my playing field.
The minute I started focusing solely on large and financially stable companies, it became obvious that with some judgment, good advice, and patience, earning healthy returns was a far more straight-forward process than I had initially believed.
#1. FTSE 100 investing is a long game
This is the first reason to start buying FTSE 100 shares today, which, more often than not, belong to companies with great credentials. Of course, it’s always better to buy them when they are priced low, as they are likely to be in a stock market crash. But even if that’s not the case, I’d focus on these high-quality stocks anyway, given their potential.
In another article today I talk about the multi-commodity miner, Anglo American in a similar context. Despite a dip during the stock market crash earlier the year, AAL has given double-digit returns over the past two years. Of course, for a commodity company, the health of the global economy is an important aspect to consider. If the economy is weakening, demand for metals will collapse and vice versa.
#2. Accelerated growth is afoot
Which brings me to the second point. The global economy has been in shutdown mode for much of 2020. But things have already started looking better, which explains the improvement in AAL’s fortunes as well. As growth bounces back to at least 2019 levels, I reckon that FTSE 100 stocks will continue to gain.
Moreover, some sectors are poised to be bigger long-term gainers than others. I’m bullish on e-marketplaces like Ocado and Rightmove. While other companies have become a shadow of their former selves, Ocado has strengthened. In other words, the coronavirus accelerated the inevitable shift towards online shopping.
Rightmove’s share price saw a sharp dip in share price in March, but that is all but forgotten now. The real estate marketplace has been supported by the government’s fiscal stimulus. Stamp duty waivers have amped up housing market sales, helping the property sector. But even otherwise, it was only a matter of time before RMV became a bigger player in the real estate technology space.
#3. Non-trivial passive income
Lastly, even if we are investing for capital growth, FTSE 100 shares’ dividend yields may still be non-trivial. In yet another article today, I talk about five such shares with over 5% yields. And that is during a bad year. Dividends are set to improve next year, which can add to your passive income if you start buying FTSE 100 shares today.