It seems like confidence in UK shares is surging. But is the market deserving of this optimism and support? Or is it the case that investors are becoming arrogant in their hopes?
Here’s what’s going on right now with UK investments, why investors think we’ve turned a page and how you can invest in the best British companies around.
[top_pitch]
What’s going on with British shares?
After record outflows of £5.3 billion during 2021, it seems like investors have changed their tune and are lapping up UK shares.
According to a recent survey of ISA holders by Freetrade and InvestingReviews.co.uk, one in five investors say they plan to increase their exposure to UK shares.
And, a paltry 4% say they will be reducing their UK investment holdings.
Why are investors more confident in the UK market?
Dan Lane, senior analyst at Freetrade believes that part of this British resurgence is to do with value investing and a change in sentiment towards US growth stocks. He says: “Maybe the UK market’s relatively cheap valuation is proving too hard to resist, or maybe the allure of US tech is waning slightly.
“Whatever the reason, the UK seems to be back on the menu in 2022. Investors will still need to maintain that long-term view though.”
He goes on to explain that volatility aside, investing your cash in the right way can help to beat back the nasty effects of inflation. He explains: “What is clear though, is leaving your money in a cash account is really just not an option for anyone hoping to generate meaningful returns. It doesn’t carry the same risks as investing but cash drag is real.”
Inflation might concern some investors, but that should make them look at their assets and how well-prepped their companies are to take charge of their own destiny regardless of what’s happening in the global economy.”
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How can investors find good value UK shares?
This might sound like a difficult task, but finding great long-term investments doesn’t have to be a chore.
If searching through the financial reports from every firm on the London Stock Exchange isn’t your jam, that’s okay! Here are two quick and easy ways that you can find great value UK investments without all the headaches and legwork:
- Make use of The Motley Fool’s Share Advisor service, regularly dishing out excellent stock picks.
- Research and find an investment trust (for example Temple Bar) that focuses on UK value investing.
Where can you start investing in British shares?
Investing in UK firms and funds is now easier than ever. Your first step is to get yourself set up with a share dealing account.
Ideally, it’s worth holding your shiny new British investments in a stocks and shares ISA. This type of account has the incredible benefit of protecting your investment gains from tax.
Just remember that all investing carries a degree of risk, and you may get out less than you put in. So, make sure you’re on top of the rest of your finances and don’t invest more than you can afford.
