TRADING31/05/2022

How to invest in the FTSE 100?

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How to invest in the FTSE 100?How to invest in the FTSE 100?How to invest in the FTSE 100?

What does the FTSE 100 mean? And which are the best ways to invest in the FTSE 100? Discover more on Fineco's Newsroom.

IN A FEW WORDS

How to invest in FTSE 100What's the FTSE 100FTSE 100 investing


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How to invest in the FTSE 100: the definitive guide

For many English investors, the FTSE 100 index is the main stock market to invest in. Here you can find all the stocks from the UK’s top listed companies and lots of long-term and short-term investment opportunities. Here’s what you need to know to invest in the FTSE 100.

What is the FTSE 100 index?

What does FTSE 100 mean? The FTSE 100 is an index of the top 100 UK companies listed on the London Stock Exchange with the highest market capitalisation. In order to be included in this index, a company must meet certain requirements; for example, it must be listed on the London Stock 

Exchange, have a certain level of stock liquidity and have a sterling denominated price.

FTSE stands for Financial Times Stock Exchange and combines the names of the companies that founded this stock index, namely the London Stock Exchange and the Financial Times. The number 100 refers to how many stocks are included in this index, that is, a total of 100 stocks from companies listed on the London Stock Exchange.

The companies’ market capitalisation is recorded every three months; therefore, the index is updated if necessary or stays the same. This index is important because it includes the UK’s largest companies, whose performances can influence the whole of the London Stock Exchange trends. Other indices include the FTSE 250, the FTSE SmallCap and the FTSE All-Share.

The FTSE 100 includes the companies:

  • Shell
  • AstraZeneca
  • HSBC
  • Diageo
  • Unilever
  • GlaxoSmithKline
  • BP
  • British American Tobacco
  • Rio Tinto
  • Glencore

There are various ways to invest in the FTSE 100. Firstly, you can purchase listed companies’ stocks directly, creating a shares portfolio for long-term investments. Some companies also offer dividends, so you can not only make a profit from capital gains but also from regular payments from listed companies that provide this type of advantage to shareholders.

Another way to invest in the FTSE 100 is through funds and ETFs, that is, instruments that allow you to invest in various shares at the same time, diversifying your investments and minimising risk. The third option is through CFD trading, an investment solution that allows you to speculate on the volatility of stocks and/or the whole index in the short-term through derivative financial products.

In these cases, it is important to know that the performance of companies listed on the FTSE 100 is closely linked to the UK economy. If the UK economy is good, it’s likely that the FTSE 100’s companies’ value will also increase. Whereas when the UK economy is bad, the FTSE 100 often decreases in value too. Because of this, it’s advisable to invest in stock indices in other countries too and not just in the FTSE 100.

Geographical diversification allows you to minimise risk in order to reduce the impact that the UK’s economy potentially crashing could have on your investment portfolio. When you invest in the FTSE 100, bonds are not included as this index is only made up of stocks. Therefore, those who prefer to maintain a more cautious profile must buy bonds outside of the FTSE 100.

Where to buy FTSE 100?

To invest in the FTSE 100, you must open an investment account with an authorised intermediary, that is, a company licensed by the FCA (Financial Conduct Authority). Following this, you can start to buy stocks from the companies included in the FTSE 100, choosing which stocks to invest in by using technical and fundamental analysis.

To invest in all of the FTSE 100, you must purchase ETFs or investment funds in order to invest in all the companies with just one financial instrument. On the other hand, with online trading and CFDs, you can speculate on price fluctuations of the FTSE 100’s stocks by using graphs and trading indicators in order to discover the best trends and invest short-term in the increase or decrease of shares on the FTSE 100.

With FinecoBank, you can invest in all the FTSE 100’s stocks thanks to a multi-brand platform, starting with a minimal capital of just £100 and a cost of up to 0.25% for access to all the investment platform’s services and functions. Alternatively, you can invest through online trading with zero fees and no mark-up on the FTSE 100, or choose Fineco’s innovative technologies to trade CFDs on the FTSE 100’s shares.  

Information or views expressed should not be taken as any kind of recommendation or forecast. All trading involves risks, losses can exceed deposits.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 70.82% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Fineco Newsroom is a compilation of articles written by our editorial partners. Fineco is not responsible for an article's content and its accuracy nor for the information contained in the online articles linked.

These articles are provided for information only, these are not intended to be personal recommendations on financial instruments, products or financial strategies.

If you’re looking for this kind of information or support, you should seek advice from a qualified investment advisor.

Some of the articles you will find on the Newsroom feature data and information from past years. As per the very nature of the content we feature in this section of our website, some pieces of information provided might be not up to date and reliable anymore.

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