When it comes to investing, we often forget that completely! We get obsessed with price. But it isn’t the whole story! Let’s look at the last 23 years:
Investors in the FTSE 100 since the start of 2000 have had a fair bit to contend with. I’ve stuck in some of the key events below.
The UK’s flagship index has grown from around 6600 to around 7600 over that time.
That’s a price return of about 14%; or around 0.5% per year. Doesn’t seem too impressive, does it?
But that ignores dividends – which are a HUGE part of the value you get from investing (more than half of returns over the long term, as long as they are reinvested!).
Over the period, the FTSE 100 had an average 3.8% annual dividend. And including that changes the picture completely, as seen below (both lines rebased to 100 at the start of 2000).
Rather than a 14% return over nearly 24 years, the return is closer to 170%; around 4.5% per year.
People get hung up on the price of what they’ve bought, but if they had invested £100,000 back in 2000, it would be worth £270,000 today.
That’s the value of reinvesting the dividends!
If you would like to discuss this investment type then please do not hesitate to contact one of our Independent Financial Advisers, David Rackham, on 07734 172681 or at david.rackham@templewealth.co.uk.
Past performance is not a guarantee of future results, and investing in the stock market always carries some degree of risk.
The content of this article is for general information only and does not constitute advice.
The value of your investment (and any income from them) can go down as well as up and you may not get back the full amount you invested.
Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.