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Basic Question: Marcus vs. FTSE 100 Dividend

Hi, 
I am new to investing and new to this forum.
Marcus Easy Access savings account pays 1.3%and a FTSE100 Tracker Fund pays approximately 4.5% return in dividend per year, provided this is held in a Stocks and Shares ISA (£20k per year).
In terms of earning per annum, Marcus (£260) and FTSE Tracker (£900) - This is a huge difference. 
I would like peoples opinions why people would prefer the Marcus vs. Tracker.
Obvious assumption is that you should be able to sell the tracker at the price you bought it for, and there are some small fees to maintain the tracker.
Thanks in advance for your opinions!
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Comments

  • eskbanker
    eskbanker Posts: 35,388 Forumite
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    Obvious assumption is that you should be able to sell the tracker at the price you bought it for
    That's way too rash an assumption to make - if you're going to be as glib as that then the entire comparison is meaningless and unrealistic....
  • poppy10_2
    poppy10_2 Posts: 6,583 Forumite
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    a FTSE100 Tracker Fund pays approximately 4.5% return in dividend per year
    You have absolutely no idea what dividend the FTSE 100 tracker will pay you. Past performance is not a guide to future returns. Already the big dividend companies like BP and Shell are considering or have cut their dividends. Plus with a stock tracker not only is the dividend/"interest" not guaranteed, you could lose the capital which you have invested, unlike with a savings account.
    Obvious assumption is that you should be able to sell the tracker at the price you bought it for,
    That's a rather risky assumption to make. If you'd bought a FTSE 100 tracker three months ago, you'd barely get 75% of what you paid for it if you sold today
    poppy10
  • ColdIron
    ColdIron Posts: 9,642 Forumite
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    Obvious assumption is that you should be able to sell the tracker at the price you bought it for
    That 'should' is doing rather a lot of heavy lifting B)
  • I would like peoples opinions why people would prefer the Marcus vs. Tracker.

    Marcus - capital safe
    FTSE tracker - capital at risk
    Well balanced, diversified investment portfolio rather than investing in one market - Capital still at risk 

    londontutor1987 said: Obvious assumption is that you should be able to sell the tracker at the price you bought it for, and there are some small fees to maintain the tracker.
    You can't make this assumption. 
  • coyrls
    coyrls Posts: 2,492 Forumite
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    If you assume that a FTSE 100 tracker yields 4.5% and that you can sell it for the same price that you bought it, then you are correct but only in the trivial sense that 4.5% is more than 1.3% but we knew that already and as others have said your assumptions are facile.
  • Zanderman
    Zanderman Posts: 4,816 Forumite
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    I would like peoples opinions why people would prefer the Marcus vs. Tracker.
    Because your money's safe in Marcus. And the tracker isn't and your assumptions are wrong.
  • Prism
    Prism Posts: 3,838 Forumite
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    Every time a dividend is paid the value of the share price goes down by the same amount. So all things being equal, comparing those two examples, Marcus pays you £230 interest and then you get your 20k back. The FSTE 100 pays you £900 and then you get £19.1k back. The only way the FSTE pays more than Marcus is if the share price also grows during the year, which is more likely than not but far from sure.
  • steampowered
    steampowered Posts: 6,176 Forumite
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    For the reasons the Op describes it makes no sense to be keeping significant amounts of money in savings accounts, rather than sensible investments such as stock market trackers, unless there is a very good reason why they can't accept the risk of short term volatility (for example a need to use the money for a particular purpose within the next 3-5 years).
  • Malthusian
    Malthusian Posts: 11,053 Forumite
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    Prism said:
    Every time a dividend is paid the value of the share price goes down by the same amount.
    While it is true that a dividend is just some money that you already own being moved into a different account that you also own; as you can roll up interest in a Marcus account, the Marcus account is no different in that respect.
  • Thrugelmir
    Thrugelmir Posts: 89,546 Forumite
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    Improbable that the FTSE 100 is going to yield 4.5% over the next 12 months.  What's the source of your information? 
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