How I’d aim to make a 100% return investing in FTSE 100 shares

Doubling an investment in FTSE 100 shares is unlikely to be an easy task. However, a long-term view and a focus on quality could make it simpler, in my view.

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.

Making a 100% return on FTSE 100 shares may sound impossible at first glance. After all, the index is still trading below its previous highs and faces an uncertain outlook caused by economic difficulties.

However, its past performance suggests that taking a long-term view when holding high-quality companies could be a profitable move. While it is never guaranteed to lead to positive returns, it could increase the chances of doubling an initial investment in a stock market rally.

A long-term view when investing in FTSE 100 shares

The past performance of FTSE 100 shares shows that they have delivered relatively high returns over the long run. For example, the index was established in January 1984. Since then, it has risen from 1,000 points to reach its current level of above 6,600 points. That’s an annual capital return of over 5%. When reinvested dividends are added to that figure, it means that the index has delivered an annualised total return in excess of 8%. If the index returns the same amount in future, an investment could double within nine years. 

Clearly, past performance is never a guide to future gains or losses. However, during the FTSE 100’s 37-year history, it has experienced many downturns that have caused major declines for shares. They have included bear markets such as the 1987 crash, the dotcom bubble and the global financial crisis. Although they have caused its price level to decline dramatically at times, the index has thus far always recovered to post new record highs. As such, it seems likely, but not definite, that a long-term view allows an investor to overcome short-term challenges to benefit from the stock market’s growth potential.

Investing money in high-quality shares

Buying high-quality FTSE 100 shares could be a means of obtaining higher returns in the long run, as well as lower risks. For example, companies with solid balance sheets may be less likely to struggle during uncertain economic periods. Meanwhile, businesses that have wide economic moats may be capable of delivering higher margins than their peers. This may result in faster-growing profitability over the long run.

Of course, buying companies that have such qualities is never a guarantee of avoiding losses or making gains. Any company can experience significant difficulties. However, by focusing on stocks that have such characteristics, it may be possible to reduce overall risk to some extent, and to benefit from stronger performance in the long run.

Managing risk when buying shares

A focus on high-quality FTSE 100 shares is just one means by which risk can be reduced. Diversification is another prudent step, since it reduces the risk of one company negatively impacting on an entire portfolio’s performance. While it does not guarantee investment success, alongside a long-term view and a focus on high-quality stocks, it could increase the chances of doubling an initial investment.

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.

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

Closeup of "interest rates" text in a newspaper
Investing Articles

Here’s why 2025 could give investors a second chance at a once-in-a-decade passive income opportunity

Could inflation hold up interest rates in 2025 and give income investors a second opportunity to buy Unilever shares with…

Read more »

Investing Articles

As analysts cut price targets for Lloyds shares, should I be greedy when others are fearful?

As Citigroup and Goldman Sachs cut their price targets for Lloyds shares, Stephen Wright thinks the bank’s biggest long-term advantage…

Read more »

Investing Articles

Is passive income possible from just £5 a day? Here’s one way to try

We don't need to be rich to invest for passive income. Using the miracle of compounding, we can aim to…

Read more »

Middle-aged black male working at home desk
Investing Articles

If an investor put £20k into the FTSE All-Share a decade ago, here’s what they’d have today!

On average, the FTSE All-Share has delivered a mid-single-digit annual return since 2014. What does the future hold for this…

Read more »

Hand of person putting wood cube block with word VALUE on wooden table
Investing Articles

One FTSE 100 stock I plan to buy hand over fist in 2025

With strong buy ratings and impressive growth, this FTSE 100 could soar in 2025. Here’s why Mark Hartley plans to…

Read more »

Investing For Beginners

If a savvy investor puts £700 a month into an ISA, here’s what they could have by 2030

With regular ISA contributions and a sound investment strategy, one can potentially build up a lot of money over the…

Read more »

artificial intelligence investing algorithms
Investing Articles

2 top FTSE investment trusts to consider for the artificial intelligence (AI) revolution

Thinking about getting more portfolio exposure to AI in 2025? Here's a pair of high-quality FTSE investment trusts to consider.

Read more »

Young Asian woman with head in hands at her desk
Investing Articles

Do I need to know how Palantir’s tech works to consider buying the shares?

Warren Buffett doesn’t know how an iPhone works. So why should investors need to understand how the AI behind Palantir…

Read more »