Compound interest

smej

Hypothetically speaking I have £50k spare that I would like to invest for 50 years. I appreciate its impossible to see in to the future but let's say the markets return 7% on average. Compound interest calcs say that will be worth over £1.6m by year 50. Other than inflation to compete with is it really as simple as that? 

Bravepants

See this:

https://theescapeartist.me/2019/11/09/how-to-build-a-compounding-machine/

maxsteam

If you've got a calculator with a power button, you just work out 1.07 to the power of 50, then multiply that by your initial investment.

Anything promising or implying an average return of 7% is likely to be a scam. Such promises are not allowed for mainstream UK products although it's acceptable, if done sensibly, to give indicative results.

Bravepants

maxsteam said:

If you've got a calculator with a power button, you just work out 1.07 to the power of 50, then multiply that by your initial investment.

Anything promising or implying an average return of 7% is likely to be a scam. Such promises are not allowed for mainstream UK products although it's acceptable, if done sensibly, to give indicative results.

Errr..

https://www.fool.com/investing/how-to-invest/stocks/average-stock-market-return/

https://www.sharesmagazine.co.uk/article/what-is-a-reasonable-return-to-expect-from-investing

smej

Thanks bravepants. It's certainly food for thought. As the escape artist puts it £1m in 50 years may not be worth the same as it is now but still its not too shabby. Patience is key. 

MX5huggy

I’m fairly sure my pension high end forecast id for 7% growth. 

maxsteam

MX5huggy said:

I’m fairly sure my pension high end forecast id for 7% growth. 

But they are certainly not forecasting 7% growth. They are forecasting what will happen if they achieve 7% growth, 3% growth, 0% growth, 3% depreciation, etc.. While the high end forecast is what catches the eye, I am certain that (if they are following the rules) they will point out that other outcomes are equally possible.

Thrugelmir

smej said:

Other than inflation to compete with is it really as simple as that? 

Management fees and transaction charges take their toll as well. Investments aren't correlated to increase with inflation either. Then there's the challenge of selecting an investment where you'll leave your money for 50 years. 

smej

Thrugelmir said:

smej said:

Other than inflation to compete with is it really as simple as that? 

Management fees and transaction charges take their toll as well. Investments aren't correlated to increase with inflation either. Then there's the challenge of selecting an investment where you'll leave your money for 50 years. 

It's already in an ISA wrapper invested in Vanguard FTSE Global All Cap. Hypothetically. 

Bravepants

smej said:

Thrugelmir said:

smej said:

Other than inflation to compete with is it really as simple as that? 

Management fees and transaction charges take their toll as well. Investments aren't correlated to increase with inflation either. Then there's the challenge of selecting an investment where you'll leave your money for 50 years. 

It's already in an ISA wrapper invested in Vanguard FTSE Global All Cap. Hypothetically. 

ISA wrappers protect you from tax, not charges and fees.

smej

Say its with a platform like iWeb that charge an annual fee. Other than their transaction charges of which I don't intend to make any, what else is there? Do you mean taxes when I intend to sell or withdraw?