FTSE speculation graph

There is an interesting graph on the BBC site at present. It shows the FTSE index over the last 20 years. You can see it has grown 3500 points over this period, which in the two year intervals on the graph is 175 points per year on average. If we take that increase and draw a diagonal line we can see the index is roughly on track at its correct value at present.

I've prepared an estimation of what it could be over the next four years if it actually stuck to this average increase rate (picture right).

No we all know from looking at the BBC graph that it doesn't follow the trend.. However, the key thing to remember is that, if we buy when the index is below the current trend line then we are sure to make more than we would if bought when above the line over a long term investment period.

So.. I'll be waiting for the next dip below the trend before I get an ISA index tracker! Personally I think the index will drop to around 4,500 over the next 12-18 months. Happy investments!