Personal Finance: We've seen it all before

NOTHING beats a plummeting stock market for a shock headline or three. Panicked dealers, worried old ladies, the threat of meltdown. And then a bounce back. We had it all last week.

Readers who can remember as far back as, er, last summer, will recall something similar: a global crisis, yo-yo markets, the recovery.

But if you ignored the strife and stayed invested in the UK stock market you would have done pretty well out of 1998. A lump sum of pounds 1,000 invested in Legal & General's All-Share tracker fund on 1 January 1998, for instance, was worth pounds 1,139.38 at the end of the year.

Just over 11 per cent (tax free in a PEP) is a good annual return when interest rates are on their way down. By comparison, the average unit trust rose 10 per cent during 1998 and investment trusts went up a rather less exciting 4.5 per cent.

So 1998 ended on an upbeat note but what should the normal, non-finance genius do in apocalyptic 1999? Are shares really a good idea when some City people are telling us we are entering a new type of finance crisis, a global experience that may be unstoppable?

It's disconcerting to watch the markets swing wildly, but even the most cautious must take some chances to generate anything like the amounts of cash we will need for our old age. And that means buying some shares.

Take a deep breath and chant "calm" every time you see some overpaid pundit pontificating from the trading floor. What's the worst-case 1999 scenario? A global meltdown in the financial markets, combined with the Y2K bug shutting down almost every business in the world - and then your microwave packs in.

Face it - if that happens you will have more to worry about than whether or not your PEP is doing well. Hold on to your shares, stock up on baked beans and just hope for the best.

If you have spare cash, you should take a long view and consider buying extra shares. Read our Motley Fool investment column on this page for a unique and irreverent view of the stock market and shares in the news.

Remember you have a pounds 3,000 single-company PEP allowance as well as a pounds 6,000 general PEP, and that right will be lost in April.

i.berwick@independent.co.uk

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
News
i100
Travel
Suite dreams: the JW Marriott in Venice
travelChic new hotels in 2015
Arts and Entertainment
Sink the Pink's 2013 New Year's Eve party
musicFour of Britain's top DJs give their verdict on how to party into 2015
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

Selby Jennings: VP/SVP Credit Quant- NY- Investment Bank

Not specified: Selby Jennings: VP/SVP Credit Quant Top tier investment bank i...

Selby Jennings: Quantitative Research | Equity | New York

Not specified: Selby Jennings: Quantitative Research | Global Equity | New Yor...

Selby Jennings: SVP Model Validation

Not specified: Selby Jennings: SVP Model Validation This top tiered investment...

Selby Jennings: Oil Operations

Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...

Day In a Page

Aren’t you glad you didn’t say that? The worst wince-and-look-away quotes of the year

Aren’t you glad you didn’t say that?

The worst wince-and-look-away quotes of the year
Hollande's vanity project is on a high-speed track to the middle of nowhere

Vanity project on a high-speed track to nowhere

France’s TGV network has become mired in controversy
Sports Quiz of the Year

Sports Quiz of the Year

So, how closely were you paying attention during 2014?
Alexander Armstrong on insulting Mary Berry, his love of 'Bargain Hunt', and life as a llama farmer

Alexander Armstrong on insulting Mary Berry and his love of 'Bargain Hunt'

From Armstrong and Miller to Pointless
Sanchez helps Gunners hold on after Giroud's moment of madness

Sanchez helps Gunners hold on

Olivier Giroud's moment of madness nearly costs them
A Christmas without hope: Fears grow in Gaza that the conflict with Israel will soon reignite

Christmas without hope

Gaza fears grow that conflict with Israel will soon reignite
After 150 years, you can finally visit the grisliest museum in the country

The 'Black Museum'

After 150 years, you can finally visit Britain's grisliest museum
No ho-ho-hos with Nick Frost's badass Santa

No ho-ho-hos with Nick Frost's badass Santa

Doctor Who Christmas Special TV review
Chilly Christmas: Swimmers take festive dip for charity

Chilly Christmas

Swimmers dive into freezing British waters for charity
Veterans' hostel 'overwhelmed by kindness' for festive dinner

Homeless Veterans appeal

In 2010, Sgt Gary Jamieson stepped on an IED in Afghanistan and lost his legs and an arm. He reveals what, and who, helped him to make a remarkable recovery
Isis in Iraq: Yazidi girls killing themselves to escape rape and imprisonment by militants

'Jilan killed herself in the bathroom. She cut her wrists and hanged herself'

Yazidi girls killing themselves to escape rape and imprisonment
Ed Balls interview: 'If I think about the deficit when I'm playing the piano, it all goes wrong'

Ed Balls interview

'If I think about the deficit when I'm playing the piano, it all goes wrong'
He's behind you, dude!

US stars in UK panto

From David Hasselhoff to Jerry Hall
Grace Dent's Christmas Quiz: What are you – a festive curmudgeon or top of the tree?

Grace Dent's Christmas Quiz

What are you – a festive curmudgeon or top of the tree?
Nasa planning to build cloud cities in airships above Venus

Nasa planning to build cloud cities in airships above Venus

Planet’s surface is inhospitable to humans but 30 miles above it is almost perfect