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Already this yr, the FTSE 100 index of main British shares has hit a brand new all-time excessive. It has additionally damaged the ten,000 mark for the primary time ever.
Over the previous 5 years, the FTSE 100 has grown in worth by 51%.
So, if somebody was to place in £1,000 right now, what may they be sitting on a yr from now?
What drives inventory market returns
The reply to that query depends upon three components. One is share value actions and I’ll come again to that in a second.
The second is dividends. In the intervening time, the FTSE 100 provides a dividend yield of two.9%. So somebody who places in £1,000 should earn round £29 within the subsequent yr from dividends.
Dividends are by no means assured so the precise quantity may very well be greater or decrease, however as a broad indication of what to anticipate I believe the present FTSE 100 yield is a helpful start line.
The third issue driving returns is stockbroking charges, prices and costs. These can appear small however eat into returns even on a one-year foundation, not to mention over the long run.
So it is smart to hunt for the suitable share dealing account, Shares and Shares ISA or buying and selling app.
Digging into value actions
The Footsie’s 51% development over the previous 5 years implies that £1,000 invested again then should be value round £1,510 even earlier than dividends are taken under consideration. However how may the index do within the coming 12 months?
It has accomplished nicely within the first days of 2026. Final yr’s efficiency (+22%) demonstrated that the index can do nicely even when the financial system is sluggish. Partly that’s as a result of the FTSE 100 includes corporations listed in London however a major a part of their earnings are generated abroad.
What may 2026 carry?
I believe a repeat of final yr’s efficiency over the subsequent 12 months is unlikely given a weak UK financial system and geopolitical uncertainty. But when it occurred, £1,000 may very well be value over £1,200 in a yr.
Extra optimistically, what if geopolitical considerations recede and the world steps into development mode? If that occurs, maybe the FTSE 100 might do even higher than it did final yr.
Nevertheless, at an all-time excessive amid a reasonably fragile financial system, I additionally see a threat the flagship index might fall. That would shrink the worth of £1,000 invested now.
I’m shopping for FTSE 100 shares
Personally,although, I’m not ‘shopping for the index’ by investing in a FTSE 100 tracker fund. As a substitute, I personal particular person FTSE 100 shares that I believe seem like good worth.
One I’ve been shopping for in current months is excessive avenue bakery chain Greggs (LSE: GRG), a widely known enterprise that I discover pretty easy to grasp.
The share value has tumbled 21% over the previous yr. Fears of slowing development charges assist clarify that, although I nonetheless see substantial development alternatives.
Wage inflation is a threat to profitability.
However with its robust model, confirmed enterprise mannequin, 1000’s of retailers, economies of scale and a few distinctive merchandise, I believe Greggs has a long-term profitable formulation.
Hopefully that may assist the share value. Promoting for simply 12 instances earnings, the FTSE 100 share seems low cost to me given its enterprise potential.
