Buying FTSE 100 shares is always a bit scary but particularly in turbulent times like these. Nobody wants to buy a company only to see its value plunge the next day in a stock market crash.

This year has been particularly volatile, due to war in Ukraine, post-pandemic supply shortages, ongoing Covid lockdowns in China, the energy shock, and widespread political turmoil. Investors have to be brave to exchange their cash for FTSE 100 shares.

Although maybe not that brave. The FTSE 100 has performed relatively well this year. It is down just 6.19% year-to-date while the US S&P 500 has fallen 19.54%.

Second-guessing the FTSE 100

London’s blue-chip index has held up relatively well because it is packed full of solid, undervalued dividend stocks. Investors are wary of buying overvalued stocks as sentiment turns negative, as they are more vulnerable in a crash. They also value dividends more than they did, as a regular stream of shareholder payouts can help offset some of the damage inflation is doing to their wealth.

Just because stock markets have crashed does not mean they can’t fall even further. So what do I think will happen next?

The honest, boring, and disappointing answer is that I have absolutely no idea. If I pretended otherwise, it will be a liar or a fraud. Or both.

There are simply too many variables for anyone to second-guess market movements with consistent accuracy (and no supercomputer will ever do it, either). Of course, everyone is entitled to their opinion, but that’s all it is. An opinion. It means nothing.

In case you feel let down, I’ll tell you what I do know. The FTSE 100 has fallen this year. Therefore stocks listed on the index are cheaper than they were. This presents me with a buying opportunity, but also poses a threat.

Before buying a bargain stock, I would like to know why its share price has gone south. Sometimes the reason will be beyond its control. For example, a housebuilder is likely to have fallen sharply this year, as investors assume rising mortgage rates and input costs will hit demand.

I’m not even thinking about a stock market crash

Yet every stock in the housebuilding sector will not have fallen at exactly the same speed. A company with a worryingly high level net debt is likely to have fallen faster than a rival with a tiptop balance sheet. Similarly, one with a strong order book or well-covered dividend will perform better than one without these things.

Those operating in areas of the country where demand is likely to remain relatively solid are also likely to have an edge. I will take factors like these into consideration when buying any stock. They can help me separate the wheat from the chaff.

I’m not going to spend time working out where the market is likely to rise or fall. Instead, I will devote my energies to looking at individual stocks, and seeing whether their numbers add up. There’s still an element of speculation involved and they could fall next day if stock markets do crash, but I reckon this lifts the odds in my favour.

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Harvey Jones doesn’t hold any of the shares mentioned in this article. 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.

The FTSE 100 has performed better than most global stock markets this year, but it has still fallen sharply. Trading at just over 6,900, it is down almost 8% in 2022.

This has been a tough year. The global economy had barely started to recover from the pandemic, when Putin invaded Ukraine.

Energy prices have rocketed, while inflation is in double digits. The era of cheap money has hit an abrupt close, as stimulus goes into reverse. All the froth has gone out of stock markets, and house prices may soon start falling.

The FTSE 100 has done okay

The UK is in crisis, after former chancellor Kwasi Kwarteng’s mini-budget undermined the pound and the nation’s pension funds. As far as the FTSE 100 is concerned, the only surprise to me is that it has not fallen further.

I’ve no idea whether we will see another sell-off. I never predict stock market movements, for the simple reason that it is not possible to do so with any consistent degree of success.

Instead, I aim to take advantage of market movements after they have happened. At least there I’m on solid ground. The FTSE 100 has dropped this year, therefore my favourite companies are cheaper. If I buy them today, I’m getting a relative bargain.

Naturally, the lead index could drop again, making them cheaper still. If that happens, I will console myself with the fact that my reinvested dividends will pick up more stock at the lower price.

I will further console myself by investing a little more, at the lower price. That’s how I invest. By feeding any spare money I have into the market, taking advantage of any dips.

There are so many bargain stocks on the FTSE 100 right now, I hardly know where to start. Many individual stocks have fallen much further than the index as a whole. For example, private equity firm Intermediate Capital Group is down 51% over 12 months, and now trades at a bargain 5.5 times earnings. It yields a thumping 7.67%.

I’m amazed by how cheap stocks are

Many other FTSE 100 stocks have a similar profile. Barclays is down 24% in the last turbulent year. It trades at just 3.93 times earnings and yields 4.16%. British Land is down 30%. It’s valued at just 3.38 times earnings and pays income of 6.43%.

I would need to do more research before actually buying them, but their low valuations and high yields are incredibly tempting. There are loads more like them on the FTSE 100. This is a great time to buy dirt-cheap dividend stocks.

The big risk when buying companies is that I may be walking into a value trap. Especially now, as inflation powers upwards and consumers and businesses face the worst cost squeeze in four decades. I expect things to get worse rather than better, but I also remind myself that stock markets typically recover long before the actual economy does.

If I waited for happier times to buy FTSE 100 shares, they would cost me a lot more than they do today, and yield far less.

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Harvey Jones doesn’t hold any of the shares mentioned in this article. The Motley Fool UK has recommended British Land Co. 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.

More people are working beyond 65 than ever before, but I would like to have the opportunity to retire early if I can. The only way I can do that is to save enough money for a sustainable retirement income, and I reckon FTSE 100 shares are a great way to do that.

In recent years, US tech stocks have grabbed the limelight. That is now going into reverse as investors wake up to the charms of the FTSE 100, as UK blue-chips offer a solid, steady income stream from dividends. That’s what I need to retire early.

Despite this year’s volatility, the index has escaped the stock market crash. It trades at a similar level to the start of the year. By contrast, the S&P 500 has fallen more than 20% year-to-date, and is in a bear market.

I’d retire early on these stocks

Yet a whole heap of FTSE 100 stocks are trading at cut-price valuations, while also paying hugely generous dividends. Better still, many of these dividends are comfortably covered by earnings, which makes them relatively secure.

One stock that jumps right out at me is insurer Aviva. It generates solid cash flows, year after year, from selling pensions, protection and general insurance. Yet it habitually trades at a low valuation. Right now, I can buy it at just 7.8 times earnings. Better still, this will give me a staggering income of 8.7% a year, covered 1.5 times by earnings.

Dividend income is never guaranteed. Aviva suspended its payout during the pandemic, although quickly restored it. Management knows how important the dividend is to shareholders, and will be reluctant to cut again except in extreme circumstances. The £13bn group recently reported “continuing momentum” in the six months to 30 June. Interim operating profits rose 14% to £829m. It looks steady enough for me.

The Aviva share price has not moved much over the years, although it has jumped 13% over the last 12 months. Over five years, it’s down 9%. I’m not buying Aviva shares for growth though. I’m sure that will come over time, but income is my main goal and this stock offers that in spades.

Oil giant BP is my second income pick. It is slightly more expensive than Aviva, trading at 13.7 times earnings. That is hardly surprising given that its share price has rocketed 47.75% over the last year. Five-year performance is less impressive at just 1% though.

I’m buying FTSE 100 dividend income shares

BP now faces the huge challenge of transitioning from fossil fuels to renewables. Like Shell, it has only made tentative steps so far. The energy crisis has shown that the world still needs plentiful oil and gas during this year’s energy crisis, but management cannot rely on that continuing forever.

While acknowledging the risks, I’m backing BP to make the leap. Frankly, management has no choice. But this doesn’t have to happen overnight. The income looks rock solid at the moment. BP’s forecast yield of 4.4% is covered a stunning six times by earnings. Usually, two times is seen as comfortable.

I’m now scraping together some cash to go shopping for shares, and when I have it, these two will be at the top of my list. My plans to retire early depend on them.

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Harvey Jones doesn’t hold any of the shares mentioned in this article. 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.

Passive income is money earned without work. Someone who knows all about that is legendary investor Warren Buffett. His company Berkshire Hathaway owns a portfolio of shares that generates millions of dollars in passive income each week.

While my ambition is far more modest than that, I think it makes sense to apply the wisdom of a successful investor like Buffett when trying to boost my own passive income streams.

Here is how I would use his approach when selecting shares for my own share portfolio.

Focus on where the ball is going

If dividend shares are an important source of passive income, the higher the yield on those shares the more money I would hope to earn.

Although that is true, it leads some investors to fall into a trap. A value trap, sometimes known as a yield trap, is what happens if I buy a share because of its high yield only to discover down the road that the dividend gets cut, or axed altogether. Not only is my passive income reduced, the share price could also fall as investors adjust to the new reality.

One way Buffett tries to avoid yield traps is by looking forwards not backwards. He does not focus exclusively on a share’s dividend history. Instead, he considers the share as a small stake in a business. So he assesses whether the business has the ability to make large profits in future that could fund dividends.

Go for quality

There are lots of good businesses around. But there are few truly great ones. I reckon Buffett has some of them in his portfolio – companies such as Apple, American Express and Coca-Cola. What I think makes these three businesses great, in my opinion, is they each have something no competitor can copy directly, whether it is an iconic brand or loyal customer base.

That matters from a passive income perspective because it gives those companies pricing power. In other words, because they have a unique offer, customers will be willing to pay a price premium for it.

That can help support profits – and dividends. Apple pays a dividend. American Express pays a dividend and last reduced its payout in 1994. Coca-Cola pays a dividend and has increased it for 60 years in a row.

By identifying quality businesses with a sustainable competitive advantages the way Buffett does, I can invest in businesses I think can make profits to fund dividends far into the future. Over time, that should help my dividend income streams significantly. Hopefully, I could earn passive income for life.

Passive income is linked to share price

But while Buffett likes great companies, so do other investors. That can push the prices up to silly levels. Quality shares are often not on sale, but sometimes they are. Like Buffett, I use those moments as buying opportunities to boost my passive income streams.

Buffett typically only buys shares when they are attractively priced. Doing that matters a lot to my passive income streams, as if I buy a share when its price is low I will get a higher dividend yield than buying the same share when its price is higher.

I am always looking out for great companies, even if their current price means I will not buy their shares just yet.

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Christopher Ruane has no position in any of the shares mentioned. American Express is an advertising partner of The Ascent, a Motley Fool company. The Motley Fool UK has recommended Apple. 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.

I reckon investing in UK shares is a far better way of building a passive income for my retirement than buy-to-let, even though the latter could make me lots of money. Shares are quicker, easier and a lot less taxing than becoming an amateur landlord.

I prefer shares because I can buy them simply and easily. I log onto my online platform, pick the stock I want to purchase, and click ‘buy’. It’s done in seconds. Then I can get on with my life.

I’d buy UK shares instead of a buy-to-let

That makes shares a brilliant way to buy a passive income. Once I have chosen a balanced portfolio of mostly FTSE 100 shares, I don’t really have to do very much. Better still, all my returns are free of income tax and capital gains tax, provided I buy within my £20,000 Stocks and Shares ISA allowance.

I’ll check up on their progress from time to time, to see if my money is in the right place. And that’s pretty much it. While I’m working, I’ll reinvest all my dividends for growth. When I retire, I will draw some of those dividends as passive income to top up my pension. A few clicks and that’s done too.

Better still, that should generate a rising passive income, as top companies aim to increase their shareholder payouts over time. This should help my income keep up with inflation, and maintain its spending power.

By contrast, I can’t see anything ‘passive’ about generating income from a buy-to-let. It looks like a huge amount of effort, with a massive tax burden on top.

I want my passive income to come easily

First, I’d spend time trawling through property portals. Then I’d have to visit properties, pay for a survey, and pay legal fees to a conveyancing solicitor. If I complete, I’ll have to pay stamp duty on top (and landlords pay a 3% surcharge).

At this point, I won’t have generated any passive income. I still have to do up the property, then start the hunt for tenants. That involves interviews, inventories, deposits, and plenty more. Plus there is always the danger that I will install the tenant from hell.

Even if I don’t, I still need to replace them when they move on. As well as fix any problems in the property, and comply with all sorts of complex landlord legislation. Plus my rental income and capital growth is is subject to income tax and capital gains tax.

That’s not for me. I want my passive income to come easily. Buying UK shares takes seconds. Stamp duty is just 0.5%. The only ongoing cost is my platform fee. It is true that I could invest in a share from hell, and lose a lot of money. That’s the risk investors take. But at least I won’t have to call the bailiffs in. I can just sell it.

Company dividends aren’t guaranteed. They can be cut as well as raised. Yet I still think they are the best way to generate a rising passive income for my retirement.

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Harvey Jones doesn’t hold any of the shares mentioned in this article. 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.

ASOS’ share price has tanked 72% since this point in 2021. Prices have been volatile over the last 24 hours following yesterday’s interim results release. But selling activity has heated up again today.

Does this fresh weakness provide another great dip-buying opportunity for me? Or should I avoid ASOS shares like the plague?

A quick recap

ASOS’ half-year update on Tuesday offered up some goodies as well as some nasties. On the positive end of the scale, ASOS said revenues were up 4% at constant currencies in the 12 months to February 2022. This was despite the impact of supply chain issues and stock availability problems.

ASOS also saw its customer base continue to grow. It had 26.7m active shoppers on its books as of February, up 300,000 from six months before.

Now for the bad news

ASOS’s update shows that sales growth has, as expected, slowed considerably over the past year. Turnover leapt during the pandemic as Covid-19 lockdowns shuttered physical clothing retailers and forced people online. As a consequence adjusted pre-tax profits crashed 87% year-on-year to £14.8m.

Significant cost inflation (and in particular increased staff and freight costs) is what’s really spooking investors today. Gross margins at ASOS slumped 190 basis year-on-year to 43.1% as of February as the retailer was also forced to increase clearance sales.

Gathering clouds

The worry for ASOS is that these inflationary pressures seem to be worsening (ONS data today showed consumer price inflation in the UK hit new multi-decade highs of 7% in March).

Indeed, it yesterday warned that the external environment has become “more challenging” during the past six months. It also said “the full impact of recent inflationary pressure on consumers and the potential impact on discretionary spend are yet to be felt.” This creates more risk for the second half than usual, ASOS noted.

Reasons to be cheerful?

So should I buy ASOS shares today? Well there are some reasons to be optimistic for the online shopping giant.

Hargreaves Lansdown analyst Matt Britzman, for example, notes that “the acquisition of Topshop looks to be a real asset and there are signs that the group’s push outside the UK has potential if supply chains and stock levels can keep up with demand.”

Topshop sales rocketed 193% in the first half, thanks to strong sales in Britain, the US and Germany.

However, for me, these opportunities don’t quite offset the risks. In the short term, those inflationary pressures threaten to decimate shopper demand and keep costs rising sharply.

And over the longer term, ASOS will have a fight on its hands to win business. The mid-tier clothing market is already ultra competitive, and retailers continue investing heavily in e-commerce to chip away at ASOS’ market share.

Today, ASOS’s share price commands a forward P/E ratio of 20 times. This isn’t low enough to encourage me to buy the e-retailer today. I’d rather buy other UK shares to capitalise on the digital revolution.

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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended ASOS and Hargreaves Lansdown. 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.

But thinking outside the box has enabled many individuals to rise above and make truly titanic returns. Investment in UK shares has proved to be a particularly lucrative path to wealth for many over the past decade. Data just released by HM Revenues and Customs (HMRC) reveals how profitable investing has become for ordinary folk.

2,000 ISA millionaires!

According to the taxman, there are currently 2,000 ISA millionaires in Britain today. That’s according to data released following Freedom of Information requests from InvestingReviews.co.uk. The average holding for these wealthy individuals sits at a mammoth £1,412,000 too, the data shows.

HMRC says that 80 of these ISA millionaires are sitting on a pot of between £2m and £2,999,000. A further 60 also have funds worth £3m or above, with the average pot in this group sitting at a whopping £6,199,000.

Total holdings among ISA millionaires now sits at a staggering £2.8bn, according to HMRC. And InvestingReviews says that all of these high rollers are likely to be Stocks and Shares ISA holders.

Making a million

I own a Stocks and Shares ISA. I consider it a great way to invest in UK shares because it allows me to invest up to £20,000 a year without having to pay a penny in tax.

Studies show that stocks usually provide returns well above those which standard saving products can. Indeed, UK share investors tend to enjoy an average compounded annual return of 8% over the long term. This sort of rate can help someone who aims to invest regularly like me with a big pot to retire on.

Let’s say I can afford to invest £475 a month in UK shares via my ISA. After 35 years, I may have joined the millionaire’s club with a mighty £1,017,720 sitting in my account (based on that annual rate of 8%).

UK shares I think could make me rich

It’s not guaranteed, of course, and investments can go down as well as up. Investing our cash in shares is riskier than placing it in something like a cash account. But, in my opinion, the potential rewards I can receive with a Stocks and Shares ISA outweigh the risks. Some of my holdings include FTSE 100 royalty Diageo, Prudential and Coca-Cola HBC, shares that have provided big returns to their shareholders for decades now.

I also have an option to buy lesser-known high-growth shares that could help turbocharge my returns. I have also loaded up on software development services provider Keywords Studios, for example, and veterinary services provider CVS Group. Both of these companies are listed on London’s Alternative Investment Market (AIM).

There are countless other UK shares out there that could help me make a fortune with my ISA. And expert guidance from The Motley Fool could help me achieve my quest of becoming an ISA millionaire.

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Royston Wild owns CVS Group, Coca-Cola HBC, Diageo, Keywords Studios, and Prudential. The Motley Fool UK has recommended Coca-Cola HBC, Diageo, Keywords Studios, and Prudential. 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.

I’m keeping a close eye on American banks’ earnings reports and wondering if they can provide an insight into what comes next for UK bank stocks.

US bank stock opportunities 

According to US reports, a few key threats and opportunities are emerging for banks across the pond.

Firstly, the opportunities. The US Federal Reserve is indicating that it expects to start raising interest rates sometime next year. This is usually good news for banks: when interest rates are higher, they can expand profit margins by charging steeper rates on loans. 

Last week saw the first suggestion that interest rates could rise as soon as December in the UK, meaning UK-listed bank stocks could also benefit. 

A US jobs report also came out last week, suggesting falling unemployment. This is good news for bank stocks: they tend to be cyclical, performing better as the economy grows. 

US bank stock risks

And now to the risks. What concerns are on analysts’ radars as US banks announce their third-quarter earnings and what could these suggest to us about UK bank performance?

The cyclical nature of bank stocks leaves them vulnerable if economic recovery falters. This could again be a useful lesson for the UK. With high energy prices and fears about rising inflation, our macroeconomic recovery remains uncertain.

Rising costs at US banks seem to be a concern, driven by competition with fintech stocks for both workers and customers.

Will these costs prove difficult to rein in? Or will they prove a sound investment in the future, and increase competitiveness in the long run? At the moment, it is difficult to tell. 

Any insights for UK banks? 

So what insights do these third-quarter earnings reports give us into UK bank performance? With its strong investment banking presence, I am wondering if they might be most relevant to HSBC. 

HSBC

If third-quarter results follow the same pattern as their colleagues across the pond, we could see HSBC reporting increased costs.

HSBC’s second-quarter results revealed an increase in operating costs due to higher performance related pay, suggesting that it is also facing the same battle to retain staff. It also showed a 4% increase in technology spending, taking the total to $3bn over the first half of the year. 

But with HSBC heavily exposed to China, I am reminding myself that there are more forces at play. Its share price fell to a five-year low in September as panic about Evergrande intensified, though it has since rallied, and is approaching its 12-month high of 455p. 

Not a crystal ball 

All in all, third-quarter reports from US banks aren’t a crystal ball. But they do provide some interesting insights into the forces impacting banks in the US. Higher wage costs, increased tech investments, and an uncertain economic recovery could all prove key themes as UK-listed banks announce earnings later in the month. 

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Hermione Taylor does not have a position in any of the shares mentioned. Bank of America is an advertising partner of The Ascent, a Motley Fool company. JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. The Motley Fool UK has recommended HSBC Holdings and Lloyds Banking Group. 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.

Most investors dread a stock market crash, but it’s not all bad – for some, it’s an opportunity. According to Investopedia, “A stock market crash is a rapid and often unanticipated drop in stock prices.” If you’re an investor, it can be terrifying, but not everything drops in a crash. Let’s take a look at what goes up when the stock market crashes.

Why would anything go up when the stock market crashes?

The stock market is a barometer of investors’ confidence in the market. When investors lose confidence, stocks fall. If you think about it that way, it makes sense that the things the investors are still confident about have more chance of rising in a stock market crash. The trick is making sure you have those assets in your portfolio.

What goes up when the stock market crashes?

We can argue about whether rising fear, uncertainty and doubt cause or result from stock market crashes, but in reality, it’s probably both.

More usefully, several investment types often rise when others fall. Of course, past performance is not an indicator of future results. Just because something rose in the last crash, it doesn’t mean it’ll rise in the next one. That said, let’s take a look at some common options.

Safe-haven assets

Gold, silver and bonds are the classics that traditionally stay stable or rise when the markets crash. We’ll look at gold and silver first.

In theory, gold and silver hold their value over time. This makes them attractive when the stock market is volatile, and the increased demand drives the prices up. However, history shows that this is more true of gold than silver. According to GoldSilver, gold went up in six of the nine stock market crashes between 1976 and 2020, while silver only went up in two.

As fixed-income instruments, bonds offer stable income regardless of what the stock market is doing. This makes good-quality bonds a safe haven when stocks are volatile. As always, increased demand drives prices up. Bear in mind, however, that not all bonds are quality bonds.

Essential stocks to survive and recover

Stock market crashes don’t happen on their own – something causes them. In 2020, this was the COVID-19 pandemic, and in 2008, it was the mortgage crisis. If you can identify what will help fix or survive the crisis, those stocks will probably go up.

The path out of a pandemic relies on vaccines and medical equipment, so you’d expect stocks for related companies to go up. This is indeed what happened, with stocks like Pfizer performing well during COVID-19.

You can see a similar pattern in each stock market crash, but the likely solution – and therefore the ‘right’ stocks – is different each time.

Dividend yields

A dividend yield is the amount a company pays out in dividends relative to its stock price. Dividends tend to be consistent, so when the stock price falls and the company continues to pay the same dividend, then the dividend yield rises. While dividend-yielding stocks are more volatile than gold, they’re less volatile than other stocks. This could make them a good choice in a stock market crash.

What are risky options in a stock market crash?

If you think a stock will fall in the short term, shorting or short-selling is a way to bet against it. Put simply, you borrow a few shares from a friend (for a fee), then sell them. When the price of the shares falls, you buy them back at a lower price, give them back to your friend and pocket the difference.

However, if the price rises, you still have to buy them back and return them to your friend. In this case, you foot the losses as well. Spread-betting and contract-for-difference trading is similar, and just as risky.

Derivatives should go up when the market goes down, but they’re complicated and risky. Hedging and inverse exchange-traded funds (ETFs) are based on derivatives. While these are all less risky than short-selling, they only respond to short-term changes. This makes them less helpful as a long-term safe haven in a stock market crash.

Takeaway

A stock market crash is unnerving, but it’s not the end of the world. Remember, you haven’t lost anything until you sell your investments at a lower price than you bought them for. If you include some stable assets in your portfolio to buffer you against sudden changes and invest for the long haul, it could even be an opportunity.

If you’re ready to start investing, find a share dealing account that suits you!

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Investing can be a great way to grow your wealth. If you’re in the UK or EU and interested in investing, you’ll soon be able to buy Wise shares. Let’s explore what Wise is, whether Wise shares are right for you and how to get started!

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What is Wise?

Wise, formerly TransferWise, is an online borderless bank account and money transfer service in 56 currencies. They’ve grown quickly since 2011. In the 2021 financial year, they facilitated $54 billion (£39 billion) worth of low-cost international transfers. Wise users can manage multiple currencies online, either through the app or in the browser.

In 2020, Wise received a UK licence to offer investment products. They might move into this area in the future, so watch this space.

Who can buy shares in Wise, and when?

In June 2021, Wise announced their intention to float on the London Stock Exchange. If you can buy and sell UK shares, you’ll be able to buy Wise shares from 8am BST on the day they list. At the moment, that will probably be in early July 2021.

What will Wise shares be worth?

Rather than an initial public offering (IPO), Wise is going public via a direct listing. This means the market sets the initial share price, which can make the price more volatile. Sky News reported that insiders expect the initial value of Wise shares to be between £5 and £9 billion.

[middle_pitch]

What is OwnWise?

If you’re in the UK or EU and you already use Wise for your banking and transfers, you might be eligible for OwnWise. While anyone can buy Wise shares, OwnWise is only for users. It’s a Wise program to encourage up to 100,000 of their users to become shareholders.

To be eligible for OwnWise, you must be:

• an active Wise customer;
• in the UK or EU;
• not restricted by law from receiving and holding shares in Wise;
• able to receive OwnWise benefits without any special procedures; and
• not be a current or former employee of Wise or any Wise Group company.

OwnWise members who buy their shares during the eligibility period and hold their shares for 12 months or more will receive bonus shares worth 5% of the initial value of their shares (to a maximum of £100). They’ll also get to join a private community, and they might even win a trip to the annual conference!

If you’re eligible, you will have received an email from Wise in the last few weeks with instructions on how to register your interest.

How can I buy Wise shares?

Whether or not you qualify for OwnWise, once Wise shares are listed on the share market you can buy them through your normal brokers. If you don’t have a broker yet, you still have time to compare share dealing accounts or check out the list of brokers on the Wise investor site.

If you want to buy Wise shares on the first day, don’t leave it until the last minute. It often takes a few days to get a new account set up. The exact process for buying shares depends on your broker or share dealing account, but on most platforms, it’s very similar to online shopping.

Should you invest in Wise?

That’s up to you, so do your research. Since 2019, Wise has had a healthy revenue compound annual growth rate (CAGR) of 54%, and 42% CAGR for volume. With 10 million customers worldwide, that’s a great result. But remember: past performance is not an indication of future results, and the value of shares can go down as well as up.

If you’re just starting out, check out our guide on how to start investing for some handy hints before you dive in!

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