Fiat Investment Returns

I saw a review in the media last week which listed the best primary asset classes performance for investors over the last 23 years. Unsure why 23 years is significant and I would query the relevance to stock pickers who may not adhere to such time horizons - but anyway, to the numbers.

Take UK shares for example [no other details] - the staple diet of our pension and ISA funds. The article says this medium turned your £10,000 into £55,847 over a 23 year period, which equates to an average annual return of 7.76%. Consumer Price Index [CPI] inflation was 1.96% pa over the period. So, an average real rate of return - over 23 years - of around 5.75%. If Retail Price Inflation [RPI] had been used - this includes modest expenses like mortgage interest, council tax and so on - and is higher than CPI [by around 1%] then the real rate of return falls to 4.75%.

The survey does not mention fees - so I will assume they have not been included. The survey refers to shares as opposed to shares/equities held within a portfolio. Stockbrokers charge of course to allow for commission and other "expenses" but the financial services industry has made a tidy profit every year regardless of returns delivered to investors.

The Telegraph printed an article in June 2017 on this very subject and confirmed that the FCA quoted average total fund charges as being 1.13% pa. This is before broker fees and "advice" fees - so my guess of 2% pa could be considered kind to the investment industry.

Deducting fees from the return takes the figure to 2.75% pa adjusted for inflation.

Over 23 years.

For the best investment.

Life changing? Value for money? Only you can answer these questions.

Digital assets are regarded with disdain by the investment industry; in fact its leaders go to great lengths to question our wisdom, sometimes our mental acuity, if we stray into these areas. Digital assets - also known as alternative/digital/crypto currencies - are commodities and are similar to buying euros for your next European holiday. No lock in, no annual fees, 100% secure, no exchange rate issues - unlike buying euros - but most importantly of all, the gateway into Blockchain technology.

The European Parliament Committee on Economic and Monetary Affairs asserts that cryptocurrency can be used as an alternative to money.

Finance Ministers from the G20 say they are cautiously optimistic about the impact cryptocurrencies can have on the world economy.

American Express has joined Apple in filing a patent for a Blockchain based Proof of Payment system.

Throughout history there has been a time when little was known about something relatively new. Remember 1992? The World Wide Web. Did it catch on?

Let's continue the conversation.