British shares increase 77 times in value

Glen_Clark

..... well at least thats the headline in the Telegraph.
As usual its a plug for the fund managers who advertise, and no mention of the effect their fees would have.
But more to the point I would like to know how these figures have been arrived at. All I can see is just a vague 'according to Halifax' Have they included all the companies who have gone bust, or just the ones that are left? Does anyone know?

lionk to article: http://www.telegraph.co.uk/finance/personalfinance/investing/9306068/British-shares-increase-77-times-in-value.html

grey_gym_sock

dunno how it was calculated (it should be from indexes), but it sounds realistic.

77 times in 60 years is 7.5% per year, compounded.
calculation: 77**(1/60)

they also say it's up 207% more than inflation. that's 1.9% per year.
calculation: 3.07**(1/60)

i'd guess they've not included dividends.

their conclusions don't follow at all, though:

they say this makes a case for investing in the UK ... when they haven't given historical figures for any other markets!

they say owning british shares will give you a say in how companies are run ... when the institutional shareholders have nearly all the votes.

and they jump suddenly into tips of specific shares or funds.

Glen_Clark

According to this calculator: http://www.thisismoney.co.uk/money/investing/article-1633426/Isa-fund-charges-calculator-How-fees-affect-returns.html If the funds had charged 2%pa, that would be 70% of the proceeds to them, and 30% to the mug who put all the money in
Meanwhile, a house would have appreciated about 250 fold.

coastline

Fully in favour of shares as long term investments...I think that bit of raw data will be similar to what Barclays produce as a guideline..cant remember the name of the comparison...its based over 100 years...gilt/equity ??
The catch is of course you got to have a fund manager who beats the indices over the long term...and as we've found out many don't...why would they introduce tracker funds...although I could have that bit wrong..
Its difficult ..I think ??...to find long term performance charts of funds...there'll be some on the internet...I can think of M&G who might have a UK fund running for decades...now I'm struggling...I'd like to see a few if anyone has some links..
We do know the FT100 was 1000 in 1984...and now stands at 5260....I've just had a quick go on an inflation calculator and it came up with 100 then is 266 now...
Dividends and management fees to consider etc etc...and a decent UK fund...or tracker...or if you're confident do it yourself....
Just going to mention a family member who inherited 5 grand in 1986...never bothered with investing..simply put it into N Rock fixed rate bonds ...reclaimed the tax as a non payer...hes now got around 30 grand..

guitarman001

I made a lot of risky investments over the last 3 years. Broke even on FTSE100 shares. Lost 70% on AIM shares (OUCH). Tempted to go in for an index tracker and MAYBE some funds instead.

Are funds worth it? Just stick with the trackers? How on EARTH do you pick a fund, there are SO many!!

grey_gym_sock

guitarman001 wrote: »

Are funds worth it? Just stick with the trackers? How on EARTH do you pick a fund, there are SO many!!

well, i wouldn't bother with active funds trying to beat the UK or US market as a whole. it's sometimes claimed that active funds do better in some other (less exhaustively researched) markets - not sure how true that is, though.

equity income funds may have a point, because they have to buy out-of-fashion shares to generate a higher income, and if they come back into fashion, then they also benefit from (relative) capital gains. trackers may not work so well here: you can mechanically pick the high-yielders, but how does a mechanical process identify which are about to cut their dividends? OTOH, you might be happy to pick equity income shares yourself.

smaller companies are sometimes mentioned as an area where trackers could do less well - not sure about the truth of this, either. or of the truth of the idea that small caps outperform big caps (which would imply one should be overweight in small caps).

coastline

a couple of links regarding fees etc...no idea if they are accurate..

http://www.guardian.co.uk/money/2011/nov/04/investment-funds-hidden-fees

http://www.thisismoney.co.uk/money/investing/article-1583915/A-guide-cheapest-index-tracker-funds.html

bowlhead99

Glen_Clark wrote: »

Meanwhile, a house would have appreciated about 250 fold.

I have done zero research on the relative merits of investing money in property 60 years ago versus investing in a basket of shares 60 years ago, as neither of these options are available to me.

However, if the shares increased in value 77 times, and the property increased in value 250 times, this is likely not the whole story, as the shares have produced 60 years of dividends (which could have been reinvested in the shares, property or simply enjoyed) while the property has cost money to maintain.

Glen_Clark

bowlhead99 wrote: »

I have done zero research on the relative merits of investing money in property 60 years ago versus investing in a basket of shares 60 years ago, as neither of these options are available to me.

However, if the shares increased in value 77 times, and the property increased in value 250 times, this is likely not the whole story, as the shares have produced 60 years of dividends (which could have been reinvested in the shares, property or simply enjoyed) while the property has cost money to maintain.

Presumably the property has not been left empty?

kevin52

Acccording to Sunday's Independent, investment funds increased in value by 35,984% in the last 60 years, with income re-invested. The next best investment class was property with an 8,505% increase.

poorgirl-54

complete rubbish