The FTSE 100 has hit a record high. Is now the time to start investing?

As the new year progresses, the UK’s leading stock index is on the rise.

The FTSE 100 rose above 10,000 points for the first time since its founding in 1984, to the applause of investors and the Chancellor who wants more of us to move money from cash savings into investments.

The index tracks the performance of the 100 largest companies listed on the London Stock Exchange and is up by more than a fifth in 2025.

But with so many people still struggling with day-to-day costs and some shares being talked about as overvalued, is the success of the FTSE really a good time to encourage first-time investors?

People can invest their money in many different ways and in different things. Various apps and platforms have made it easy to do this.

Most importantly, the value of investments may increase and decrease. Invest £100 and there is no guarantee that the investment will still be worth £100 a month, a year or 10 years later.

However, long-term investments in general can be profitable. The rise of the FTSE 100 is proof of this. Shareholders may also receive dividends, which they can take as income or reinvest.

For years, the advice has been to treat investments as a long-term strategy. Give it time and your money pot will grow much larger than it would in a savings account.

In contrast, cash savings are much more stable and secure. The amount of interest varies between account providers, but savers know what the returns will be. Savings rates were pretty good last year, but interest rates are generally thought to be on a downward trend.

Savings accounts are popular when setting aside money for emergencies, vacations, a wedding, or a car; There’s one main reason for this: you can usually withdraw money quickly and easily.

“It’s important for everyone to be a saver. This gives you access when you need it,” says Anna Bowes, savings expert at financial advisers The Private Office (TPO).

“This means you don’t need to cash out your investments at the wrong time.”

Investment evangelists agree that savings are an important part of the mix for anyone managing their money.

“Startups should have a cash buffer in case of emergency before investing,” says Jema Arnold, voluntary non-executive director of the UK Individual Shareholders Association (ShareSoc).

According to the Regulatory Financial Conduct Authority (FCA), one in 10 people have no cash savings and another 21% have less than £1,000 available in an emergency.

But Arnold and others note that cash is not risk-free. As time goes on, unless the savings account interest rate increases, the spending power of savings is eroded due to the rising cost of living. inflation.

Our brains make decisions about risk and reward thousands of times every day. We consider the risk of crossing the road rather than the reward of crossing to the other side.

When it comes to money, those who are more risk-averse have settled for savings, while others have turned to investing. If you have money you can afford to lose, that also helps.

It is worth remembering that millions of people already have it. money deposited for pensionsalthough it is often managed on their behalf and they may not pay much attention to it.

The FCA says seven million adults in the UK with cash savings of £10,000 or more could achieve better returns through investment.

Chancellor Rachel Reeves has advocated for consumers to take more risks. For those with money, it is clear that long-term investment benefits them and the UK economy as a whole, he says.

HE Changing the rules for tax-free Isas (Individual Savings Accounts) is a much-discussed move aimed at encouraging investment.

That’s why, within a few months, we were all stunned by an advertising campaign (funded by the investment industry) telling us to give some thought to investing.

This will be a modern version of the Tell Sid campaign of the 1980s, which encouraged people to invest in the newly privatized British Gas.

So is this a good time for such a campaign? At the time many people were investing in British Gas to make a relatively quick profit.

Invest now; There is a possibility that the value of your investment may take a short-term hit.

Many commentators have suggested that the AI ​​tech bubble is about to burst. In other words, they say, the value of companies that focus heavily on AI is likely to be overinflated and plummet; This means that anyone who invests in these companies will also see the value of these investments decrease.

Not just commentators. Bank of England warned There may be a “sharp correction” in the value of large technology companies. America’s top banker Jamie Dimon, managing director of US bank JP Morgan, said: was worriedand Google boss Sundar Pichai told the BBC: “Irrationality” in the current AI boom.

In reality, no one knows if and when this will happen.

All of this could make people willing to help, and the regulator has drawn up plans to allow banks to offer some assistance.

Financial advice can be expensive at the moment and regulated advisers may not deal with people who don’t have tens of thousands of pounds to invest.

Financial influencers have tried to fill the void on social media. Some have been accused of promoting financial schemes and risky trading strategies with ostentatious get-rich-quick promises in front of flashy cars – but this without any authorization or explanation of the risks involved.

Some first-time investors have turned to artificial intelligence for tips. Some are vulnerable to scammers offering too-good-to-be-true investment opportunities.

Almost one in five people have turned to family, friends or social media for help when making financial decisions, according to a survey by the FCA.

This means that registered banks and other financial firms will be allowed to bid from April. targeted supportpreferably free. Tailored advice that can only be provided for a fee by a qualified financial advisor will be insufficient. But it will allow them to make investment and retirement recommendations to clients based on what similar groups can do with their money.

This is a big change in monetary guidance, but as with investments, there’s no guarantee it will be successful.