Stock Markets Easily Beat Cash Since The Credit Crisis


Investors with nerves of steel during the credit crisis are likely to be £30,000 better off than those who succumbed to panic.

The credit crunch was a decade ago and while housing markets are still recovering, many stock markets have soared to new peaks from those dark days.

Anyone who staked money into companies listed on the FTSE All Share in London on July 31, 2007 and regularly saved £5,000 a year in the intervening period will have seen their £50,000 investment soar to £81,015 a decade later.

The return works out at 62%.

Less determined investors who sheltered their wealth as cash savings would have seen their £50,000 increase just 1.2% to £50,619.

Low interest rates erode savings

The difference is £30,396.

The figures were worked out by investment firm Fidelty International.

The firm’s personal investing director Tom Stevenson explained low interest rates offered by banks and building societies barely covered inflation.

“Many investors had their fingers burned when the financial crisis kicked off ten years ago and some will have been sheltering their savings in cash ever since. However, our analysis shows that had you left your money languishing in cash over the past decade, your savings would have stagnated due to an environment of perennially low interest rates,” he said.

Benefit of investing

“If on the other hand you had held your nerve ten years ago and sensibly drip fed your savings into the market since the financial crisis started you would have seen your investments grow significantly. Our figures show that by regularly investing your money into the market your initial investment of £50,000 would have grown to £81,015 – that’s despite the dramatic stock market crash in late 2008, the subsequent Eurozone sovereign debt crisis and various political risk events over the past ten years.”

“By regularly drip-feeding money into the market year after year, you will benefit from a process known as pound-cost averaging. This means that you buy more units in your investments when prices are low and fewer when prices are high. Buying at a variety of prices and spreading ongoing investments over time also helps to cushion your portfolio from dips in the stock market.”

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