Stocks and shares beat cash

Nearly 30 years on from the ‘Big Bang’, when the deregulation of the London stock market took place, Fidelity International considers how your money has fared over the past three decades.

Stocks and shares beat cash

Analysis from Fidelity International shows a deposit of £10,000 in the average UK savings account back in 1986 would now be worth £28,196 in the bank. If on the other hand you invested in the FTSE All Share over the same time period that £10,000 would now be worth £121,466.

Similarly, if you opted to stick your £10,000 in the FTSE 100 you would now be sitting on £126,867 after 30 years and if you chose to invest in the FTSE 250, your investment portfolio would be worth £265,035.

Investors who chose to place their investments with an active manager rather than following a UK index could have been even more richly rewarded. If, for example, they invested £10,000 in the Fidelity Special Situations Fund in 1986, they could now be sitting on a whopping £401,868.

Moreover, if you chose to take a more diversified approach and invested £10,000 in the BlackRock Continental European fund for example, your investment pot would now be worth £427,181 – nearly £400,000 more than leaving your money in cash.

Initial investment of £10,000 made 30 years ago (31/08/1986 to 31/08/2016):

Total return

FTSE All Share:

Total return

FTSE 100 :

Total return

FTSE 250:

Fidelity Special Situations Fund BlackRock Continental European Fund Cash
£121,466 £126,867 £265,035 £401,868 £427,181 £28,196

Source: Fidelity

Tom Stevenson, investment director for personal investing at Fidelity International, said: “If anyone is unsure about the benefits of investing in the stock market over stashing cash under the mattress, especially over the long term, then our calculations highlight just how rewarding investing can be. On a 30 year time horizon – a realistic investing timescale for many people – simply investing, holding on and reinvesting dividend income can lead to really impressive returns.

“With interest rates at record lows and looking as if they could fall further, the adage that cash is king really doesn’t hold much water these days. UK savers looking to achieve decent long term returns really need to be looking further up the risk spectrum, investing in the slightly riskier bonds issued by companies rather than governments or moving into stocks and shares.”

Sources: Fidelity International, September 2016. Returns are net of fees. Cash source: Morningstar UK Savings 2500 (G) MP002. Returns are net of fees.

 

Please remember, no news or research item is a recommendation or advice to buy. Every Investor is not responsible for accuracy and may not share the author’s views. If you are unsure of the suitability of any investment for your circumstances please contact an adviser. All investments can fall as well as rise in value so you could get back less than you invest.

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