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Last week saw the flagship index of leading UK shares, the FTSE 100, hit a record high. But does an all-time high make it a good or bad time for a stock market beginner to start investing?
To answer that question, it is important to understand the wider context.
What an index is – and isn’t
An index contains some shares – in the case of the FTSE 100, it is the 100 London-listed shares with the biggest market capitalisation (and that also meet certain other requirements).
That means it represents a slice of the market (albeit a significant one in the case of the FTSE 100) not the whole thing.
This can be seen by comparing the contrasting performances of the FTSE 100 (up 13% over the past five years) with that of the FTSE 250 index for smaller capitalisation companies (down 5% in the same period).
On top of that, as companies with growing capitalisations move into the…
