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I have several FTSE 100 Share. I see them as a smart way to build long-term wealth.
Footsie shares have been through a difficult period in recent years. But here are two reasons why I will continue to buy them.
they deliver
First, they offer solid long-term returns.
stock market volatility is something that investors cannot avoid. Markets and companies will go through ups and downs. It is unavoidable.
But is there a way to mitigate this? Well, there is. It is investing for the long term. The market has proven over time that the best way to profit is to look at the bigger picture. By this I mean think in years and decades, not weeks and months.
The FTSE 100 crashed 15% in 2020. In 2022, it is only up around 2%. But since its inception, it has achieved an average return of 7% annually. That's proof that patience pays off.
they look cheap
There is another reason why I am keen to continue buying FTSE 100 shares today. That's because they look very cheap. Right now, the index trades at an average of 11 times earnings.
UK shares have come under huge pressure in recent years. Brexit and the pandemic are just two events that have driven prices down. But I'm not complaining. I think now I have the opportunity to buy.
what I'm buying
That being said, there are plenty of stocks I have my eye on. One of them is Legal and general (LSE: LGEN).
Of course, the stock hasn't performed the best in recent years. In the last 12 months, its price has fallen by 5.4%.
But let's zoom out. With every stock I buy, my goal is to hold it for 10 to 15 years. Ideally it would be even longer.
So, although in the short term stocks have not proven to be the most fruitful investment, if you had bought stocks in 2010, you would have a 185.7% return today. That being said, I must point out that past performance is in no way an indication of future performance.
But is Legal & General a smart buy today for years to come? I would say yes.
Has suffered recently. Assets under management have fallen. People are less willing to invest due to inflationary pressures and the cost of living crisis. As such, the company's operating profit took a slight hit in the first half of the year compared to 2022. Its full-year results, due to be released on March 6, are also expected to be worse than originally expected.
But these are short-term issues. And in fact, I think the company is in a good position to outperform in the coming years. When interest rates go down, I would expect deposits to pick up again. There are also other factors to consider, such as the aging of the population.
The stock looks cheap and trades around six times earnings. Additionally, it provides the sixth highest dividend yield in the FTSE 100 at 8.2%.
So far I have a 9.3% profit on my investment in Legal & General. But at 240p, I plan to continue buying more shares in the coming days and weeks.
