Is it Worth Investing in Low-Cost UK Stocks? Comparing FTSE 100 and S&P 500 in 2024

by | Jan 27, 2024 | Invest During Inflation | 21 comments

Is it Worth Investing in Low-Cost UK Stocks? Comparing FTSE 100 and S&P 500 in 2024




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Timestamps:
00:00 Introduction
02:07 Valuations
05:33 Holdings & Sector Breakdown
08:38 Dividends
11:03 Inflation & Interest Rates
14:38 UK Stock Investment Case
15:30 How I Would Invest in UK Stocks

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When it comes to investing in stocks, especially in the current economic climate, many investors are looking for opportunities to buy cheap stocks with potential for growth. In the UK, the FTSE 100 is often seen as a prime market for finding undervalued stocks, but how does it compare to the S&P 500 in the US? And should you buy cheap UK stocks in 2024?

The FTSE 100 is an index of the 100 largest companies listed on the London Stock Exchange, while the S&P 500 includes 500 of the largest US companies listed on the New York Stock Exchange or Nasdaq. Both indices are widely watched and highly regarded by investors, making them important benchmarks for measuring the performance of the stock market.

In recent years, the FTSE 100 has lagged behind the S&P 500 in terms of performance. This has led to many UK stocks being perceived as undervalued compared to their US counterparts. However, this does not mean that UK stocks are necessarily a better investment. It is important to consider the underlying fundamentals of the companies and the broader economic and political factors at play.

When it comes to buying cheap UK stocks in 2024, there are several factors to consider. First, it is important to look at the overall health of the UK economy and how it compares to the US. Brexit, ongoing trade negotiations, and geopolitical tensions can all impact the performance of UK stocks. Additionally, the performance of individual companies within the FTSE 100 should be examined to determine their potential for growth.

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It is also important to consider the sector weighting of the FTSE 100 and how it compares to the S&P 500. For example, the S&P 500 has a higher concentration of technology and healthcare stocks, which have been outperforming other sectors in recent years. This means that while UK stocks may be cheap, they may not necessarily have the same growth potential as US stocks in these sectors.

Furthermore, it is important to consider currency risk. As a UK investor buying UK stocks, you are exposed to the potential depreciation of the British pound. This can impact the overall return on investment, especially if the pound weakens against other major currencies.

Ultimately, whether or not you should buy cheap UK stocks in 2024 depends on your investment strategy, risk tolerance, and investment goals. While UK stocks may be perceived as cheap, it is important to conduct thorough research and analysis before making any investment decisions. The FTSE 100 may offer opportunities for value investing, but it is important to consider the broader economic and market conditions before diving in.

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21 Comments

  1. @TomsPersonalFinance

    Invest in UGRW and 590+ other ETFs on InvestEngine (my recommended low cost ETF investment platform).
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    When investing, your capital is at risk.

  2. @Valaens

    Hi! I'm here because Mr. Rip recommended your channel. I'm watching a few videos and enjoying them. A few suggestions to improve: raise the volume (I gotta turn the tv volume up when your videos come); you sound a bit bored and monotone while reading your script, and that makes me lose focus after a few minutes. Keep up!

  3. @user-qg1gx5kn9v

    Hi Tom. Do you also have a workplace pension? Interested to hear if you are happy with fund performance etc and if you would leave it or transfer and manage yourself? Thanks

  4. @Chris-uo5fz

    UGRW looking like the best index to buy for UK stocks, cuts out a lot of the ftse 100 stocks that aren't really worth holding and gives a healthy 33% mid cap exposure

  5. @clarkeysam

    For me, keep it simple. Assume that the market is efficient and therefore everything is priced in. Most pros dont manage to beat the market, so chances are that we can't, so just buy the whole global market.

  6. @drew1784

    I stay away from US stocks because my brokers automatically charge 15% withholding tax on their dividends even if they're in my ISA

    This is never the case with UK companies if they're in my ISA

  7. @davidjones4130

    Just looking for sourses on the wisdom tree growth etf. As the yield i think is lower than on the video ?

  8. @Callofdootie

    0.29% fees compared to 0.07% though ?

  9. @marklydon435

    How can it possibly be worth holding a FTSE 100 tracker paying 3.9% yeild when i can take no risk in cash at over 5%.

  10. @coderider3022

    Avoid FTSE uk indexes. Bad sector concentration, bad balance. Vanguard are crazy with 25% in uk. Better off with EM and risking it.

  11. @matski2804

    Brokerage fees increased on uk stocks, and capital gains threshold now reduced 2x in the UK, forget the stocks, time to leave the country.

  12. @Dr.JubairsFinance

    Just watched it all, very good rationale, FTSE 250 looking pretty good

  13. @ahamedchowdhury6106

    UNILEVER, SHELL, BP, RIO, GSK, AstraZeneca, I have all of these ..happy to keep them 🙂

  14. @SilentEire

    Seems to me like the LSE is a prime stock-pickers market. I myself have made some nice returns by buying two Irish listed businesses trading in London. I’m sure there’s a lot more bargains to be found

  15. @Abdul_Rahman86

    Great video yet again. I have just increased my position in vanguard ftse uk equity income fund. the dividend yield was close to 6%. And I think if I can dollar cost average and let it compound for 25 years (SIPP) I’m sure it’ll be worth a penny or 2 when I cash out. VUSA will always be my true love

  16. @sethanith3181

    Good video and analysis. The potential results of the general election really put me off investing in the UK, would be interested your views on that for UK growth…

  17. @its1me1cal

    Yeah UGRW is the one I’m interested in for the UK portion of my portfolio

  18. @Huxley350

    The last 10 years has made me more and more convinced in behavioural finance as the driver of markets rather than economic metrics.

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