Julian Knight: Shares - now 'long term' is forever

Ever since I started reporting on money a decade ago, I have had one mantra constantly repeated to me: shares are a better bet than almost any other type of investment over the long term. This is the intellectual justification for our pensions, with-profits and unit trust funds being heavily invested in equities.

But during these 10 years I have seen little evidence of this mantra actually holding true. In fact, £1,000 invested in the FTSE 100 at the turn of the millennium would be worth around £700 today. I can't think of any other investment class that has lost quite so much of its capital value over this time.

So what is the response of the experts? They move the goalposts. When I started out, financial advisers and stockbrokers defined a long-term investment as lasting five years; they now say we should wait 10 or 15 years for the returns to arrive.

When the news broke last Monday of the original rejection of the Wall Street bailout, and the Dow recorded its single-biggest one-day loss since 1929, I was in the City having dinner with a group of independent financial advisers. The colour drained from many of the faces around the table and one IFA said he was suddenly wondering whether he had been sold a pup over share investing. Would his clients have been better served if he'd directed them to other investment classes?

That could have been a hasty reaction and indeed, over a really long span of time – 40 or 50 years - the performance of equities stacks up much better. But next time I hear the shares mantra, I'm going to take it with an even bigger pinch of salt than I do already – something that many readers, judging by a lot of emails received and conversations held, have been doing for years.

Overdue protection

The guarantee for depositors has at last been raised from £35,000 to £50,000. This is against the backdrop of the Irish government's promise to protect all savers, leading to a flood of money to the Emerald Isle. Putting aside the Irish move – described by one economic expert, rightly, as an "asinine" and "beggar my neighbour" policy – the protection limit should have been raised a lot sooner. Many months ago in fact.

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Recruitment Genius: Digital Optimisation Executive - Marketing

    £30000 - £35000 per annum: Recruitment Genius: The UK's fastest growing, multi...

    Recruitment Genius: Financial Reporting Manager

    £70000 - £90000 per annum: Recruitment Genius: A Financial Reporting Manager i...

    Recruitment Genius: Payments Operations Assistant

    £23000 - £25000 per annum: Recruitment Genius: They win lots of awards for the...

    Recruitment Genius: Telephone Debt Negotiator

    £13500 - £20000 per annum: Recruitment Genius: This nationwide enforcement com...

    Day In a Page

    On your feet! Spending at least two hours a day standing reduces the risk of heart attacks, cancer and diabetes, according to new research

    On your feet!

    Spending half the day standing 'reduces risk of heart attacks and cancer'
    Liverpool close in on Milner signing

    Liverpool close in on Milner signing

    Reds baulk at Christian Benteke £32.5m release clause
    With scores of surgeries closing, what hope is there for the David Cameron's promise of 5,000 more GPs and a 24/7 NHS?

    The big NHS question

    Why are there so few new GPs when so many want to study medicine?
    Big knickers are back: Thongs ain't what they used to be

    Thongs ain't what they used to be

    Big knickers are back
    Thurston Moore interview

    Thurston Moore interview

    On living in London, Sonic Youth and musical memoirs
    In full bloom

    In full bloom

    Floral print womenswear
    From leading man to Elephant Man, Bradley Cooper is terrific

    From leading man to Elephant Man

    Bradley Cooper is terrific
    In this the person to restore our trust in the banks?

    In this the person to restore our trust in the banks?

    Dame Colette Bowe - interview
    When do the creative juices dry up?

    When do the creative juices dry up?

    David Lodge thinks he knows
    The 'Cher moment' happening across fashion just now

    Fashion's Cher moment

    Ageing beauty will always be more classy than all that booty
    Thousands of teenage girls enduring debilitating illnesses after routine school cancer vaccination

    Health fears over school cancer jab

    Shock new Freedom of Information figures show how thousands of girls have suffered serious symptoms after routine HPV injection
    Fifa President Sepp Blatter warns his opponents: 'I forgive everyone, but I don't forget'

    'I forgive everyone, but I don't forget'

    Fifa president Sepp Blatter issues defiant warning to opponents
    Extreme summer temperatures will soon cause deaths of up to 1,700 more Britons a year, says government report

    Weather warning

    Extreme summer temperatures will soon cause deaths of up to 1,700 more Britons a year, says government report
    LSD: Speaking to volunteer users of the drug as trials get underway to see if it cures depression and addiction

    High hopes for LSD

    Meet the volunteer users helping to see if it cures depression and addiction
    German soldier who died fighting for UK in Battle of Waterloo should be removed from museum display and given dignified funeral, say historians

    Saving Private Brandt

    A Belgian museum's display of the skeleton of a soldier killed at Waterloo prompts calls for him to be given a dignified funeral