The FTSE 100 passed 10,000 points for the first time since its launch in 1984 as the UK government moves to encourage households to shift money from cash savings into investments, even as questions are being raised about market risk, household finances, and how much support first time investors will receive.
Market Performance And Government Aims
The index, which tracks the 100 largest companies listed on the London Stock Exchange, rose by more than 20 percent during 2025. The rise has been welcomed by investors and by Chancellor Rachel Reeves, who has said more people should invest for the long term rather than keep money in cash. She has begun changing the rules on tax free Individual Savings Accounts in an effort to steer savers toward investments and is backing an advertising campaign funded by the investment industry that will start in the coming months.
The campaign is intended to prompt households to think about investing, in a similar way to the Tell Sid adverts of the 1980s that encouraged people to buy shares in British Gas when it was privatised.
Savings Versus Investing
Investing can offer higher long term returns but comes with the risk that values can fall. An investment of £100 could be worth more or less than that amount in the future, depending on market conditions. Shareholders may also receive dividends, which can be taken as income or reinvested.
Savings accounts provide steadier returns and allow people to access money quickly, which is why they are often used for emergencies or major purchases such as holidays, weddings, or cars. Anna Bowes, a savings expert at financial advisers The Private Office, said having savings allows people to avoid selling investments at the wrong time when markets fall.
Jema Arnold, a voluntary non executive director at the UK Individual Shareholders Society, said people should have a cash buffer before starting to invest.
According to the Financial Conduct Authority, one in ten people in the UK has no cash savings, while 21 percent have less than £1,000 available in an emergency. The regulator also says seven million adults with £10,000 or more in cash savings could achieve better returns through investing, although cash loses spending power over time if interest rates do not keep up with inflation.
Concerns About Market Valuations
Some commentators have warned that parts of the stock market, especially companies linked to artificial intelligence, may be overvalued. The Bank of England has cautioned that a sharp correction in the value of major technology firms could occur. JP Morgan chief executive Jamie Dimon has said he is concerned, and Google chief executive Sundar Pichai told the BBC there was irrationality in the current AI boom.
The risk is that a fall in these stocks would reduce the value of investments made by households, particularly those entering the market for the first time. There is no clear view on when or whether such a downturn will happen.
New Rules On Financial Guidance
Many people lack access to professional financial advice because regulated advisers often charge fees and may only take clients with larger sums to invest. In that gap, some people have turned to social media influencers or to AI tools, while others have been targeted by fraudsters promoting schemes that promise unrealistic returns.
The FCA says nearly one in five people seek financial guidance from family, friends, or social media. From April, banks and financial firms will be allowed to offer targeted support based on groups of similar customers. This support will not be tailored to individuals and will not replace paid financial advice, but it will allow firms to suggest investment and pension options that may be suitable for customers in similar situations.
The regulator said the change is intended to improve access to money guidance, though there is no guarantee it will improve outcomes for first time investors.
Featured image credits: Wikimedia Commons
For more stories like it, click the +Follow button at the top of this page to follow us.