UK markets closed

£2k spare? I’d aim to grow it with these FTSE 100 stocks right now!

T Sligo
Arrowings ascending on a chalkboard

With £2,000, it may be tempting to jump on the next get-rich-quick bandwagon.

I’m sure you will have heard of people making a fortune with Bitcoin or buy-to-let properties.

Each of these investments has a catch. While buy-to-let initially sounds reasonable, large fees will often be accrued, there will be tax implications, and your investment will be challenging to liquidate. 

Bitcoin’s catch is that it has no underlying value, other than what people will pay for it. It’s more like speculation than investing. When you buy stocks, you literally own something: a portion of the business. 

There’s another bonus to investing in stocks. Looking back, shares have outperformed most other investments. I must not that it is possible that history may not repeat itself.

But taking this into account and with the tax-free nature of a Stocks and Shares ISA, I think this makes the asset the best thing for individuals to invest in.

With £2,000 spare, I’d look to buy some shares in these two FTSE 100 companies.

AstraZeneca

AstraZeneca (LSE: AZN) has made significant progress in the past few years.

Partly this is due to its increased investment in research and development. A benefit of this action is that the company has new drugs in the pipeline.

CEO Pascal Soriot, who joined the company in 2012, must take some credit for turning the company around. As a result, AstraZeneca’s share price has increased by 60% in the past five years.

Of particular note is the sales growth from AstraZeneca’s new oncology drugs. In its full-year results, growth for these drugs was reported to have grown by 47%. The company anticipates that 2020 will “be another year of significant growth”.

In 2019, total revenue increased by 13%.

On news of the results, AstraZeneca’s share price was trading broadly flat. This could be due to worries about how the coronavirus might affect the company’s results.

Lloyds

In the past, I’ve had concerns about Lloyds Banking Group (LSE: LLOY) due to the uncertainty of Brexit, and the bank’s domestic focus. This led me to prefer rivals with more international exposure, such as HSBC.

Now that Brexit seems a bit clearer, I think it’s time to re-evaluate Lloyds.

As my fellow-Fool, Harvey Jones, points out, the bank has become a leaner company. It has cut jobs and closed branches, focussing on its core enterprises.

It turns out, I wasn’t the only investor with concerns over the bank. Lots of people have been avoiding it or selling their shares. Over the previous five years, the Lloyds share price has dropped by 23%.

This could be good news for investors looking to pick up a bit of a bargain. The share price is currently trading at a price-to-earnings ratio of just 10, and has a prospective dividend yield of 5%.

With its more focused operation, I think Lloyds could now be a great value buy. It might also be a great buy for income investors, especially those with a long term horizon.

By reinvesting the dividends, compound interest could work in your favour, potentially helping you retire that much quicker.

The post £2k spare? I’d aim to grow it with these FTSE 100 stocks right now! appeared first on The Motley Fool UK.

More reading

T Sligo has no position in any of the shares mentioned. The Motley Fool UK has recommended AstraZeneca and Lloyds Banking Group. 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.

Motley Fool UK 2020