With April just days away, my focus turns to how I can make the most of new investment opportunities in Q2. Although there’s always some merit in putting cash in FTSE 100 trackers and index funds, I think there are smarter ways to try and outperform the market. Here are my top three at the moment.
Making volatility my friend
The first thing I’m doing is placing orders on some of the FTSE 100 stocks that I’m keen to buy. An order is a commitment to buy a stock at a pre-specified price. So for example, if a stock is at 100p, I could place an order to automatically buy X number of shares if the price hits 90p.
I personally use orders when the market is very volatile. When looking at March, the FTSE 100 swung by over 500 points. In early March, the index dropped below 7,000 points, yet is currently at 7,540 points.
The benefit here is that if the market continues to be choppy in April, I might be able to buy the stocks I want at discounted levels compared to where it’s currently at. Given that I don’t watch the FTSE 100 all day, I think having an order is the best way to take advantage.
The risk of an order is that the needed price I set might not be hit, so I won’t buy anything.
Dividend gems in the FTSE 100
The second smart way to invest in my view is to continue to take advantage of dividend payers. Last week we got the latest inflation reading for the UK, moving even higher to 6.2%. Even with the rise in the base rate from the Bank of England, there’s still a large gulf between interest I could earn on cash and the rate of inflation.
So for April, I still prefer to put my spare cash in dividend stocks that can offer me income. I wrote about five stocks with above average yields that can be read here.
There’s no guarantee that dividend stocks will continue to pay out income going forward. This is a risk, but if I do my homework then I can filter for companies that have a solid track record.
Thinking ahead
Finally, my third option is to buy FTSE 100 stocks that could become more popular later this year. For example, airline operator IAG has been volatile in recent months. Good news such as easing Covid-19 restrictions has been offset by bad news with higher oil prices.
Yet if I can see beyond this, I think later this year the share price should be higher than it is right now. On that basis, buying in April should allow me to jump the gun as it were.
Another good theme is renewable energy. I feel the buzz around this has gone a little quiet so far in 2022, but expect it to be central theme in years to come. Therefore, I’d try and take advantage now before interest surges again.