Putting your hard earned cash to use; how we should be using FTSE live trackers to help

writersgeekinc By writersgeekinc, 14th Nov 2012 | Follow this author | RSS Feed
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This article is about Putting your hard earned cash to use; how we should be using FTSE live trackers to help

Putting your hard earned cash to use; how we should be using FTSE live trackers to help

With the current worldwide climate, it's become an essentiality for all of us- whether we're in business or simply have invested in pension funds- to fully comprehend what the figures and titles mean in order for us to not fall behind. This has come as a result of the state of the world economy, and indeed, individual nations, many of whom are struggling to keep their population above the poverty line. It is therefore a good idea to become accustomed to finance and all it entails to truly make the most of everything you put effort in to earn. Following from that, once you've understood the concept, you will see the utility in how FTSE live charts function and how you can use them to your advantage.

What is the FTSE?

The London Stock Exchange (LSE) is the main means through which all sorts of people involved in finance, notably, stoke brokers and traders, can assess capital and where future investments should go. The FTSE itself was formed by both The London Stock Exchange and the Financial Times who got together to form the FTSE group who deliver this service. Using the stock market index, they calculate a measure of the stock index, allowing you to see which companies have more capita and so on. These are the figures you'll often hear being mentioned in financial newspapers or on the news when the FTSE is described as going up or down. It may also be of interest to note that the FTSE is essentially based in Britain, in the financial district of Canary Wharf. It is also important to note the different indices that are used, the most commonly known being the FTSE 100.

The FTSE 100 was created on the 3rd of January 1984 and started of with a value of 1,000, an amount that has grown to almost seven times this whilst at its peak. Although it has been known to reach record lows during the debt crisis that affected Europe in the past years, it's usually averaged at around 5,500. The FTSE 100 itself is a list comprising of the highest grossing company shares in the UK, and thus gives a good indication of the country's economy at any given time. It's also been known to be affected by other country's economies as the world's finances are interrelated due to the way import and exports function and the way our monetary value are interconnected. Such an example occurred when China's market's fell, having a knock on effect on the British one.

It's also a good idea to know what the news report to you each evening and how this works. The FTSE starts when markets open every day, at 8 in the morning, and close each day at 4:30 in the afternoon. The closing value is that which is reported, and throughout the day, the indices are calculated every 25 seconds.

What of other indices?

Along with the FTSE 100, there is also the FTSE 250. This does exactly as the FTSE 100, but encompasses a larger amount of companies. For some, this is concerned better guidance when wanting to look at the current state of the stock market due to its wider range. This is however, debateable, and opinion varies from person to person.

Beyond that, you can also find the FTSE 350, which simply looks at both the FTSE 100 and FTSE 250 and provides a yet wider look at the stock market. There is also another of the indices available referred to as the FTSE SmallCap that also takes into consideration smaller companies with smaller funds. If you wish to obtain a truly all-round view of the UK economy, taking into consideration all stock shares, you should look at the FTSE All-Share. Although these can be useful in keeping an eye on UK economy, as previously mentioned, world stock share markets can and do affect our own economy. It's therefore essential that whilst it's a good idea to keep an eye on the FTSE 100 as the most common one, you also are aware of the FTSE4Good, a collection of indices produced by the FTSE Group that look at global markets including the UK, USA and Europe, amongst others.

How does it actually work and how can I use it?

Considering how long the FTSE has been going for, it may come as no surprise that only 21 of the original FTSE 100 have remained at the top. This is hugely due to the way economy is always changing and the way new advances can radically alter this. For example, when the Internet became a phenomenon in the 90s, it had a huge impact on the companies listed. The way the FTSE changes also shows us just how well the system works- it truly does present us with indices that give as accurate and direct indications of the world markets and their current activity.

It therefore also follows that those 100 (or 250) companies listed in the FTSE's indices also represent accurately what the market is composed of. During the months of March, June, September and December, an independent committee meet; these are people who are experts in their fields and who are thoroughly knowledgeable in regards to all issues finance and stock exchange. A system of bands exists to assess companies; for example, companies originally in the FTSE 100 falling to 115th are likely to fall into the FTSE 250 in the next session, and those who are part of the FTSE 250 managing to have climbed to the 90th place are probably going to be now included in the FTSE 100. This system and assessment method also means that whilst the FTSE is flexible enough to accommodate changes and alterations, it is not excessive in its changes so investors don't have to make constantly make expensive alterations to portfolios.

The most important think to take from all of this is that although many people switch off at the end of the news when the topic turns to finance, it really does affect everyone in the country. Any investment you make, whether in funds or equities, the eventual return reflects the FTSE's state directly. If you wish to get more involved, Exchange-traded Funds (ETFs) are a way in to the FTSE 100, even if they may not be suitable for all international investors as they do not take in to consideration U.S. exchanges. Whatever you choose to do, be it direct involvement via ETFs or just wanting to keep an eye on your investment funds, FTSE live trackers offer you a means through to which to keep an eye on values. There a number of different types available, all looking at individual indices, and are a key way in ensuring your new found knowledge on the FTSE and how it functions, are put to good use.

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