The FTSE 100 has hit a report excessive. Is now the time to begin investing? | EUROtoday

As the brand new 12 months received into its stride, so did the UK’s index of main shares.

The FTSE 100 climbed above 10,000 factors for the primary time because it was created in 1984, cheering traders – and the chancellor, who needs extra of us to maneuver cash out of money financial savings and into investments.

The index tracks the efficiency of the 100 largest firms listed on the London Stock Exchange and rose by greater than a fifth in 2025.

But with many individuals nonetheless combating on a regular basis prices, and with speak of some shares being overvalued, does the FTSE’s success actually make it a very good time to encourage first-time traders?

People can make investments their cash in many various methods and in several issues. Various apps and platforms have made it simple to do.

Crucially, the worth of investments can go up and down. Invest £100 and there’s no assure that the funding remains to be value £100 after a month, a 12 months, or 10 years.

But, normally, long-term investments will be profitable. The rise of the FTSE 100 is proof of that. Shareholders may obtain dividends, which they may take as earnings or reinvest.

For years, the recommendation has been to deal with investments as a long-term technique. Give it time, and your pot of cash will develop a lot greater than if it was in a financial savings account.

In distinction, money financial savings are rather more regular and secure. The quantity of curiosity varies between account suppliers, however savers know what returns will probably be. Savings charges have held up fairly nicely over the past 12 months, however rates of interest are usually considered on the best way down.

Savings accounts are widespread when placing cash apart for emergencies, or for holidays, a marriage or a automotive – for one predominant cause: you may normally withdraw the cash shortly and simply.

“It is important that everyone has savings. It gives you access when you need it,” says Anna Bowes, financial savings skilled at monetary advisers The Private Office (TPO).

“It means you do not need to cash out your investments at the wrong time.”

Evangelists for investing agree that financial savings are an essential a part of the combination for everybody managing their cash.

“People starting out should have a cash buffer in case of emergency before going into investing,” says Jema Arnold, a voluntary non-executive director on the UK Individual Shareholders Society (ShareSoc).

One in 10 individuals haven’t any money financial savings, and one other 21% have lower than £1,000 to attract on in an emergency, in line with the regulator, the Financial Conduct Authority (FCA).

But Arnold and others level out that money just isn’t with out threat both. As time goes on, the spending energy of financial savings is eroded by the rising value of dwelling, except the financial savings account rate of interest beats inflation.

Our brains make a judgement about threat and reward 1000’s of instances day-after-day. We think about the danger of crossing the street towards the reward of attending to the opposite aspect and so forth.

With cash, those that are extra risk-averse have tended to stay with financial savings, whereas others have moved into investments. It additionally helps in case you have cash you may afford to lose.

It is value remembering that hundreds of thousands of individuals have already got cash for his or her pension invested, though it’s usually managed for them and so they might not pay a lot consideration to it.

The FCA says seven million adults within the UK with £10,000 or extra in money financial savings might obtain higher returns by investing.

Chancellor Rachel Reeves has advocated extra risk-taking from shoppers. For these with the cash, she says the advantage of long-term investing for them, and the UK economic system as an entire, is evident.

She is altering guidelines on tax-free Isas (Individual Savings Accounts) in a much-debated transfer aimed toward encouraging investing.

It can be why, in a few months’ time, we’re all going to be blitzed with an promoting marketing campaign (funded by the funding trade) telling us to provide investing some thought.

It will probably be a contemporary model of the Tell Sid marketing campaign of the Eighties, which inspired individuals to put money into the newly privatised British Gas.

But is that this a very good time for such a marketing campaign? Back then, a number of individuals invested in British Gas for a comparatively fast revenue.

Invest now, and there’s a probability the worth of your funding might take a short-term hit.

A number of commentators have prompt an AI tech bubble is about to burst. In different phrases, they are saying there’s a probability the worth of firms closely into AI has been over-inflated and can plunge – which means anybody investing in these firms will see the worth of these investments plunge too.

It is not solely commentators. The Bank of England has warned of a “sharp correction” within the worth of main tech firms. America’s prime banker Jamie Dimon, the chief govt of US financial institution JP Morgan, mentioned he was anxious, and Google boss Sundar Pichai informed the BBC there was “irrationality” within the present AI growth.

In reality, no person actually is aware of if and when this may occur.

All of this will depart individuals eager for some assist, and the regulator has give you plans to permit banks to supply some help.

Currently monetary recommendation will be costly, and controlled advisers might not hassle with anybody who hasn’t received tens of 1000’s of kilos to take a position.

Financial influencers have tried to fill the hole on social media. Some have been accused of selling monetary schemes and dangerous buying and selling methods with glitzy get-rich-quick guarantees in entrance of fancy vehicles – however with out authorisation or any rationalization of the dangers concerned.

Some first-time traders have turned to AI for suggestions. Some are weak to fraudsters providing funding alternatives which are too good to be true.

Nearly one in 5 individuals turned to household, mates or social media for assist making monetary selections, in line with a survey by the FCA.

So, from April, registered banks and different monetary companies will probably be allowed to supply focused help, ideally without cost. It will cease in need of individually tailor-made recommendation, which may solely be offered by an authorised monetary adviser for a payment. But it should enable them to make funding and pensions suggestions to clients based mostly on what comparable teams of individuals might do with their cash.

It is a giant change in cash steering however, as with investments, no ensures that it is going to be profitable.