What's The Next Step now i am out of Debt....

cloud_dog

debeast, now you are a rehabilitated debtor why not look to do a bit of everything (almost). My one proviso is not knowing when you might get the lump sum amounts.

From the £400pm why not allocate half to investments (funds) and half to savings /ISA's. I would suggest you top up your savings pot / ISA's with the lump sums when they arrive (if this is a long way off then you are better allocating all your monthly money to savings for the time being).

With the £200pm investment tranche you could start slowly investing it into upto four different funds (£50 each). This would allow you to spread your investments (and risk / reward) over different areas (UK, Europe, Far East, USA, Japan, etc, etc). You may find this a bit more interesting.

Just a suggestion.

cloud_dog

cheerfulcat

deemy2004 wrote:

Not quite it would be £172 in REAL terms, £3,921 in nominal terms. Also what interest rates are barclays using ? After all the site does promote equity investments so is biased in favour of equities.

Also you have to take into account population dynamics, for the stock growth period was also accompanied by the baby boomers, now the baby boomers are approaching retirement, hence a larger non productive pool will impact on associated asset prices.

OK, if you are going to use nominal terms, the £100 in the bank would have grown to £3921, whereas in the stockmarket it would have grown to £103,120.

Here is a study which covers 104 years and 16 countries. Have a look at the historic performance of investments in stock markets compared to cash and bonds -

http://forum.london.edu/lbspress_redesign.nsf/AllDocs/B6CED30E14FF94E180256E32004AB6C7/$File/Global+Investment+Returns+Yearbook+2004+Release.pdf

You will see that half of the performance came from reinvesting dividends, so you gain from compounding as well as growth in the share price ( which has so far beaten inflation ).

Baby boomers account for a tiny, tiny proportion of the world's population. According to the BBC, the Chinese population of twenty-year olds is equivalent to the *entire* population of the USA.

Edit - BTW, the Barclays study has been going for many years now, and is well respected; I have come across it in many textbooks.