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Join Which? Money5 investing trends that could define 2026
Will the FTSE continue to deliver, and could the tech bubble finally burst?
Despite cautious forecasts at the beginning of 2025, last year ended up exceeding many investors’ expectations. The FTSE 100 hit record highs, the UK bond market proved relatively stable following an early-year wobble, and the price of gold rose by 61.7%.
But a new year brings new challenges – read on to find out what to look out for when reviewing your portfolio.
Please note: the content contained in this article is for information purposes only and does not constitute financial or investment advice.
Will HMRC take your dividends?
Dividend tax was raised by two percentage points in November’s Budget. The basic rate will rise to 10.75% next year and the higher rate to 35.75%. The additional rate will stay at 39.35%.
We previously found that investing as little as £11,574 in a dividend-paying fund (outside an Isa or pension) could see you exceed the £500 tax-free allowance.
‘If your non-Isa investment pot is larger than your allowances, the smartest move is to prioritise shifting your biggest dividend-paying assets into your Isa first,’ says Laura Suter, director of personal finance at investment platform AJ Bell.
‘Look at your portfolio and rank the holdings by how much income they generate. Start at the top of this list and move the highest income-generating investments into your stocks and shares Isa first.’
Keep in mind that transferring investments into an Isa could result in a capital gains tax (CGT) bill if they’ve increased in value since you’ve acquired them.
Make use of your £3,000 CGT annual tax-free allowance and spread transfers over more than one tax year if necessary (although, on balance, it’s better to move assets into Isas sooner rather than later).
You can also transfer ownership of assets to your spouse or civil partner tax-free. They can then make use of their own allowances and transfer assets into their own Isa.
- Find out more: Best stocks and shares Isas 2026
Will the FTSE 100 slow down?
The UK’s premier stock market index has had a strong 12 months and ended the year 21% up from where it started. The FTSE has already kicked off the new year with a bang – reaching another record high in the first week of January.
In particular, healthcare firms such as AstraZeneca and GSK have benefited from treatment innovations, while banks, such as HSBC and Lloyds, are making profits from higher interest rates. Meanwhile, miners such as Fresnillo have been buoyed by rocketing gold and silver prices.
Investors have also been rewarded with a bumper forecast of £137.3bn in dividends and share buybacks.
Stock markets bounced back strongly following Trump's 'Liberation Day' tariffs
‘Such a bonanza may be one reason why the UK quietly did well in 2025 and, barring any accidents, the cash returns could keep coming in 2026,’ says AJ Bell investment director Russ Mould.
‘Any sustained dash for “hard assets” and their producers, thanks to inflation or other concerns, could favour the index and its cohort of copper, iron ore, gold and silver miners, let alone the unloved oil majors BP and Shell.’
However, the dividend tax hike could be an Achilles' heel for the FTSE 100, given that its chief attraction has historically been dividend payments rather than capital growth.
If your portfolio is overly reliant on UK-based dividend stocks, you could look further afield. Several investment banks have pointed to the Japanese market, which is having something of a renaissance.
This is in part thanks to corporate governance reforms, wage growth and a structural shift away from deflation, according to the Goldman Sachs Asset Management Investment Outlook.
- Find out more: Want passive income? Here’s how to invest for it
Expect to hear much more about investing this year
Josh Wilson, Which? investing expert, says...
Reeves is on a mission to get Britons investing. In her Mansion House speech in July, she said: ‘For too long, we have presented investment in too negative a light, quick to warn people of the risks, without giving proper weight to the benefits.’
The Financial Conduct Authority says around seven million UK adults with at least £10,000 in cash are missing out on the benefits of investing.
The numbers speak for themselves: analysis by investment platform IG shows that, since 1999, UK stock market investors have seen around seven times the real return of cash savers, after inflation.
Millions of savers, pensioners and investors will also soon be able to access free ‘targeted support’ in the form of financial guidance, thanks to reforms announced by the Financial Conduct Authority (FCA).
You'll be hearing much more about investing this year, but there's no need to wait to set up a stocks and shares Isa.
Remember, you still have time to take advantage of this year’s £20,000 Isa allowance before it resets on 5 April.
Will the AI tech bubble burst?
The so-called Magnificent Seven tech companies have swollen to the point that their combined market capitalisation of around $21.5tn now accounts for just over a third of the entire S&P 500 index.
These behemoths have used their financial muscle to back various artificial intelligence (AI) technologies and organisations, including Anthropic (Claude), DeepMind (Google Gemini) and OpenAI (ChatGPT).
But lofty valuations – and an increasing dominance within US and global tracker funds – have raised the spectre of a bubble at bursting point.
Enthusiastic backers point to AI’s potential to transform the world on a scale not seen since the advent of the steam engine.
Sceptics highlight the enormous amounts of water and energy required to power AI data centres, AI software with questionable reliability, and the increased use of debt and complex financing agreements to keep the whole show running.
A crash is far from inevitable, but adding a little more diversification to your portfolio might be in order if you feel overexposed.
According to Morningstar’s European Outlook report, small-cap and mid-cap European stocks are good value compared with the general market, and aren’t as focused on one industry, unlike tech’s dominance of the US.
- Find out more: How to balance your investment portfolio
Are government bonds safe?
The UK bond market had a muted response to the Budget, with gilt yields remaining stable.
Following the Budget, Goldman Sachs predicted that yields would fall slightly, from around 4.45% to 4% by the end of the year for 10-year gilts.
It’s possible that events in 2026, such as local elections in May, could push up gilt yields if investors view government debt as riskier. Yet buying a newly issued bond and holding it until maturity remains very low risk, as the chances of the government defaulting on its debt obligations are practically zero.
Buying and selling bonds on the secondary market in pursuit of quick profits leaves you vulnerable to unexpected price swings, however.
Holding government bonds in your portfolio is important for diversification, but you shouldn’t view them as a major money maker.
- Find out more: Investing in bonds explained
Is the gold rush over?
Gold shone brighter than ever last year, The precious metal climbed above $4,000 per troy ounce for the first time in October – the climax of a bull run that saw its value jump by more than 55%.
The price has already spiked again this month following the US capturing Venezuelan leader Nicolás Maduro, and at the time of writing stands at $4,428.
Gold has traditionally been seen as a safe haven during periods of political and economic uncertainty. With the US now turning its attention to Greenland, more investors could pile into the precious metal as global instability builds in 2026.
Remember that physical gold generally carries a price premium, and there are additional costs such as transport, storage and insurance.
As an alternative, you can invest in an exchange-traded commodity (ETC) or exchange-traded fund (ETF) that tracks the price of gold. You can buy these through investment platforms, and they can be held within a stocks and shares Isa to shield them from tax.
- Find out more: How to invest in gold
