Is there a best month to invest in FTSE 100 stocks?

What does FTSE 100 performance data from 1996 to 2020 tell me about average monthly performances and more?

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.

Historically, April has been, on average, the best month for the FTSE 100. I first stumbled upon this finding when I investigated how Santa Claus affects the FTSE 100. From 1996 through 2020, I found the average return on the FTSE 100 in April to be 2.3%. The next best performing month was December with an average return of 2%, then October with 1%.

Table 1. Avererage FTSE 100 monthly returns measured from 1996 to 2020

JanFebMarAprMayJunJulAugSepOctNovDec
Average FTSE 100 Return-0.9%0.3%-0.2%2.3%-0.3%-1.0%0.8%-0.7%-0.8%1.0%0.8%2.0%
Source: Financial Times market data, author’s calculations

Aside from average monthly FTSE 100 price returns (which do not include the effects of dividends), gain and loss frequencies can be illuminating. According to research by Equity Clock, covering 20 years of data ending 31 December 2016, gains in April occur 70% of the time. That means that April showers losses on FTSE 100 investors 30% of the time. December is the best month in terms of this metric, with gains occurring 85% of the time. October and February are tied at 75%.

FTSE 100 monthly returns

The worst FTSE 100 decline in April between 1996 and 2020 was -3.3%, which is milder than any of the other months. November is second best with -4.6% and then December with -5.5%. March has the worst maximum loss of -13.8%, which occurred in 2020 during the coronavirus market crash. November had the best return of 12.4%, which occurred in 2021.

Should you invest £1,000 in Scottish Mortgage right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Scottish Mortgage made the list?

See the 6 stocks

Table 2. FTSE 100 monthly gain probability and max and min returns measured from 1996 to 2020

JanFebMarAprMayJunJulAugSepOctNovDec
Gain Frequency45%75%55%70%45%30%60%50%50%75%50%85%
Max Return6.4%4.6%6.1%8.7%4.4%4.7%8.5%6.5%8.9%8.5%12.4%6.7%
Min Return-9.5%-9.7%-13.8%-3.3%-7.3%-8.4%-8.8%-10.0%-13.0%-10.7%-4.6%-5.5%
Source: Equity Clock and Financial Times market data

So what am I doing with all this information? Well, the first thing to note is that this data is only relevant to investing in the FTSE 100 as a whole. An index tracker like the iShares Core FTSE 100 UCITS ETF offered by BlackRock would be one way to do this. Second, these results are historical and might not hold true in the future. That being said, setting expectations in investing using historical data is common practice. But, I have to bear in mind that I could only expect, for example, an average FTSE 100 return of 2.3% in April going forward by being invested for the long term over multiple Aprils.

And of course, these return calcualtions ignore dividends. The yield on the FTSE 100 is around 3.5% right now. I would need to invest for at least a year to have a chance of capturing it and boosting my returns. Picking months to dip in and out (which would build up transaction costs) means I would miss out on this. Still, even if I don’t act on this data, it’s a useful reference for me, and helps put market moves in context. It’s always a good idea for any UK investor to familiarise themselves with Britain’s bellwether index.

5 stocks for trying to build wealth after 50

The cost of living crisis shows no signs of slowing… the conflict in the Middle East and Ukraine shows no sign of resolution, while the global economy could be teetering on the brink of recession.

Whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times. Yet despite the stock market’s recent gains, we think many shares still trade at a discount to their true value.

Fortunately, The Motley Fool UK analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global upheaval…

We’re sharing the names in a special FREE investing report that you can download today. We believe these stocks could be a great fit for any well-diversified portfolio with the goal of building wealth in your 50’s.

Claim your free copy now

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.

James J. McCombie does not own any of the shares mentioned in this article. 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

Warren Buffett at a Berkshire Hathaway AGM
Investing Articles

Dividend investors! Here’s what Warren Buffett says builds wealth in the stock market

Reinvesting dividends at yields of 8% or higher looks like a good way of building wealth. But Warren Buffett has…

Read more »

Calendar showing the date of 5th April on desk in a house
Investing Articles

Here’s my Stocks and Shares ISA plan for 2025-26

A Stocks and Shares ISA helps investors avoid taxes on dividends and capital gains. And Stephen Wright has a plan…

Read more »

Dividend Shares

Of the 20 highest-yielding FTSE 100 stocks, this is my top pick

This FTSE 100 stock currently offers a yield of 6.4%. But Edward Sheldon believes it’s capable of providing share price…

Read more »

Investing Articles

Could Tesla’s share price jump over the next 12 months? These analysts think so!

Tesla's share price has fallen by almost a third since 1 January. But optimism is high that Elon Musk's company…

Read more »

Investing Articles

I asked ChatGPT where the FTSE 100 will be in 6 months: here’s what it said…

Let’s be realistic, ChatGPT can’t predict the future. But it did do a good job of compiling data from brokerages…

Read more »

Investing Articles

Could the Rolls-Royce share price hit £10?

The Rolls-Royce share price has taken most analysts by surprise with almost everything going right for the British engineering giant.

Read more »

Investing Articles

4 REITs Fools own for passive income

REITs often have higher-than-average dividend yields compared to other stocks, making them a solid choice to consider for passive income…

Read more »

artificial intelligence investing algorithms
Investing Articles

Up 272% in just a year, is Palantir stock just getting started?

This writer recognises that Palantir has grown its business very well -- but does the stock price offer him an…

Read more »