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The stock market boom continued into 2017 with the FTSE 100 hitting a record high of 7202
The benchmark index of top UK companies bounced higher on the first day of trading of 2017 as investors celebrated the latest sign that Britain is booming.
This suggests the year ahead could be another rewarding one for investors, who will be wondering whether to let their hair down and join the stocks and shares party.
The FTSE 100 delivered a total return of almost 20 per cent last year, including capital growth and dividend income, more than 50 times the rate on the average easy access savings account, which now pays a meagre 0.39 per cent.
This is filling the nation’s goods makers with confidence for the coming year
Shares leapt again yesterday amid fresh signs that Brexit Britain is booming, as manufacturing activity surged in December to a 30-month high, thanks to strong global demand for UK exports.
Russ Mould, investment director at online platform AJ Bell, said the dip in the pound since the EU referendum has given exporters a competitive edge.
“This is filling the nation’s goods makers with confidence for the coming year.”
The FTSE 100 delivered a total return of almost 20 per cent in 2016
Joshua Mahony, market analyst at trading hub IG, said UK investors could enjoy a boost when Prime Minister Theresa May triggers Article 50 to fire the starting pistol on leaving the EU.
“Last year is a hard one to top but 2017 has kicked off in fine style for the FTSE 100.”
Risks and rewards
Savers frustrated by today’s record low interest rates may be tempted to take a punt on the stock market, but must also be aware of the risks.
Booming UK markets could crash back to earth because of threats abroad, such as more strife in the eurozone, a Chinese meltdown, or president-elect Donald Trump triggering a global trade war.
Sheridan Admans , investment research manager at The Share Centre, said other dangers include political tension in the Middle East and rising oil prices, but the global economy should continue to grow regardless.
He said investors should take a dvantage of political uncertainty in Europe: “Brexit noise could be a buying opportunity for homegrown companies, in anticipation of the UK economy’s growth outlook improving in 2018.”
Choose your fund
Last year’s most bought investment fund was Fundsmith Equity, managed by Terry Smith, which grew 28 per cent over the past 12 months, and an incredible 157 per cent over five years, according to TrustNet.com.
Choosing the right fun to invest in 2017 should be a priority
Rebecca O’Keeffe, head of investments at Interactive Investor, said: “Investors are very happy to place their money with active managers who have a strong track record.”
Second most popular fund was CF Woodford Equity Income, managed by the highly-respected Neil Woodford.
However, his fund did poorly, rising just 3.2 per cent, showing there are never any guarantees with stocks and shares.
UK markets could crash back to earth because of threats abroad
Lindsell Train Global Equity, which rose 24 per cent last year and 135 per cent over five years, was also a big seller.
As was Artemis Global Income, up 22 per cent and 127 per cent respectively over one and five years.
Damien Fahy, founder of MoneyToTheMasses.com, said recent strong performance is no guarantee of future returns: “Only invest if you can leave your money for at least five years, preferably longer, to overcome short-term volatility.”