FTSE 100 investors! Why I’d set New Year’s financial resolutions now

Investing regularly in a FTSE 100 (INDEXFTSE:UKX) tracker may help you achieve your financial goals in 2020.

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

December is likely to bring renewed impetus to many of us to sort out our financial priorities.  Although it is a busy time of year, I’d like to encourage you to take some time off from the daily hustle and set some financial goals for yourself for 2020 right now.

Goals with an action plan

Many of us make New Year’s financial resolutions. Then by mid-January, our resolve begins to fade. One way to make sure these money missions are not mostly forgotten in a few weeks is to develop a concrete plan of action.

For example, last weekend, I made a list of my financial desires, both the short and long term. You may want to do the same and include goals such as saving for a down payment for your first house, paying off credit card debt, saving up for that dream holiday, helping out a loved one financially, retiring early, or whatever else you dream of accomplishing.

I am using this week to decide which of my goals are most important to me. Then I will figure out exactly how much money I’ll need to accomplish each goal, what my timeline is, and how much I need to save and possibly invest regularly to hit my target.

You may want to take a similar course of action. You may also benefit from discussing your own financial realities and expectations with a financial planner.

Investing for retirement

For most of our readers, saving and investing for retirement will likely be very important in 2020 too.

The full basic State Pension is currently £168.60 per week. Do you truly believe you can live on that amount for the rest of your life after retirement? 

It is important to form a realistic view of how you can pay for retirement. For example, I’d encourage you to contribute to your workplace pension scheme.

Every UK resident should also learn more about the different types of ISAs available to them, with an emphasis on Stocks and Shares ISAs. There’s a wide range of investment options available for a Stocks and Shares ISA

My Motley Fool colleagues regularly cover FTSE 100 and FTSE 250 shares. They point out that over the long run, the stock market returns about 6% to 8% annually on average. 

Time is on your side

Let us assume that you’re now 35 years old with only £10,000 in savings and that you plan to retire at age 65.

You decide to invest that £10,000 in a fund now and make an additional £4,000 of contributions annually at the start of the year. You have 30 years to invest. The annual return is 7%, compounded once a year. At the end of 30 years, the total amount saved becomes £411,904.

Saving £4,000 a year would mean being able to put aside around £333 a month or about £11 a day. Might you just be wondering if you should skip that next impulse purchase in the New Year?

Which shares?

Making the right investment decisions in stock markets is not necessarily about constantly picking winning shares and funds, but rather having a long-term strategy.

If you are new to the world of investing, then you could buy into a FTSE 100 tracker fund. In 2019, the FTSE 100 is projected to return a dividend yield of about 4.5%. Any capital gains delivered by the index would be an added bonus on top of the dividend.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

tezcang has no position in any of the shares mentioned. 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.

More on Investing Articles

Investing Articles

Could the JD Sports Fashion share price double in the next five years?

The JD Sports Fashion share price has nearly halved in the past five years. Our writer thinks a proven business…

Read more »

Bus waiting in front of the London Stock Exchange on a sunny day.
Investing Articles

If interest rate cuts are coming, I think these UK growth stocks could soar!

Falling interest could be great news for UK growth stocks, especially those that have been under the cosh recently. Paul…

Read more »

Investing Articles

Are these the best stocks to buy on the FTSE right now?

With the UK stock market on the way to hitting new highs, this Fool is considering which are the best…

Read more »

Petrochemical engineer working at night with digital tablet inside oil and gas refinery plant
Investing Articles

Can the Centrica dividend keep on growing?

Christopher Ruane considers some positive factors that might see continued growth in the Centrica dividend -- as well as some…

Read more »

Smiling family of four enjoying breakfast at sunrise while camping
Investing Articles

How I’d turn my £12,000 of savings into passive income of £1,275 a month

This Fool is considering a strategy that he believes can help him achieve a stable passive income stream with a…

Read more »

Person holding magnifying glass over important document, reading the small print
Investing Articles

2 top FTSE 250 investment trusts trading at attractive discounts!

This pair of discounted FTSE 250 trusts appear to be on sale right now. Here's why I'd scoop up their…

Read more »

Smiling young man sitting in cafe and checking messages, with his laptop in front of him.
Investing Articles

3 things that could push the Lloyds share price to 60p and beyond

The Lloyds share price has broken through 50p. Next step 60p? And then what? Here are some thoughts on what…

Read more »

Young female business analyst looking at a graph chart while working from home
Investing Articles

£1,000 in Rolls-Royce shares a year ago would be worth this much now

Rolls-Royce shares have posted one of the best stock market gains of the past 12 months. But what might the…

Read more »