This page is quite old hence its rather spartan appearance.
Why not check out our Latest Stories page for our newest articles or search our site for anything.
MONEY COMMENT
By
Bear market, what bear market? Despite enduring poor equity returns over the last few years, dedicated followers of index trackers should now be showing a profit. Tracker critics will highlight the fact that, at yesterday's 4,719 close, the FTSE 100 is down nearly 30% from its 6,930 peak registered at the end of 1999. And they'll probably suggest something along the lines of 'if the blue chip index were now to grow at 8% a year, it would take until late 2009 before a new all-time high is recorded'. Ten years to breakeven in shares sure sounds bad. Thankfully, the reality is nowhere near as gloomy. You see, few people plough their life savings into shares -- never to invest again. And even fewer do so at the top of the market. Instead, most make regular monthly payments, which smooth out the peaks and troughs -- so-called 'pound cost averaging'. In addition, the main FTSE indices don't account for reinvested dividends, which can provide a significant boost to returns over time. Here are the figures. Assuming the contributions began at the December 1999 peak and were made to a FTSE 100 tracker with a 0.5% initial charge, 59 month-end payments of £100 would have subsequently grown to become a pot worth £6,116 with dividends reinvested (making a £216 profit). Note that if the dividends were spent instead, the pot would be worth £5,685 (making a £215 loss). Of course, the tracker faithful have benefited from the stock market's upturn in 2003. Toughing it out with those regular contributions during 2001 and 2002 -- and not getting frightened off by all the doom mongers -- was the key to ensuring full advantage was taken when the recovery suddenly appeared. So for tracker investors then, the bear market can resigned to history. Bring on the next bull run! Where next? Start tracking today with the Fool. Maynard contributes regularly to an index tracker. He also owns iShares FTSE 100, an exchange-traded fund that tracks the FTSE 100.