Stupid Question

ChesterDog

With and without dividend reinvestment...

[IMG][/img]

But I would suggest you track something more diverse and productive than the FTSE 100. Something more global and diverse (or a combination of indexes).

msallen

Please also bear in mind that although the FTSE100 is being used as an example here, investing solely in a FTSE100 tracker would not be a wise move (you'll find hundreds of threads on here explaining why).

Prism

simon1984uk wrote: »

Thanks Prism, that is what I was thinking. My plan would be to invest for the long term (20 years) on an accumulation basis, but obviously if I'd be in the same place in 20 years that isn't too appealing

So basically what you are saying is - if that is my goal, then the price now and 20 years ago doesn't matter, because I would have benefited from the compounding interest?

In other words, just because I could have bought at the same price in 1999 that I can today does not mean that I won't have made money during this period?

What is important is the total return. It would be great for the index to go up (FTSE 100 hasn't really done this but others have). Its great to get a good dividend yield (FTSE 100 does do this). Its best to have both.

Basically the FTSE 100 is full of companies that either don't or cannot easily grow. Therefore they tend to return more of their profits in the form of dividends. Other companies - say Amazon - provide no dividend at all, make very little profit and spend everything on growing the company so that in the future they will make profit can might pay dividends.

A global fund should give you a nice balance of both of these extremes and everything between