How Royal Bank of Scotland Group plc Turned £10k Into Just £500!

RBSI’ve been looking at the total returns from some of out most popular FTSE 100 stocks over the past decade, and the banks have been some of the most traumatic.

Bailed-out Lloyds Banking Group, for example, would have reduced a £10,000 investment to just £3,500 in the 10 years between September 2004 and September 2014, but that was a resounding success compared to the bank that Fred shredded.

Shares in Royal Bank of Scotland (LSE: RBS) (NYSE: RBS.US), you see, have crashed to effectively almost nothing in the same period.

Before a fall…

Prior to the crash, when Mr Goodwin and his cronies were splashing the cash on acquisitions as if it was going out of fashion, RBS actually had a two-for-one stock split, it’s shares were getting so headily priced. But those acquisitions proved disastrous, and crank forward a few years and the price had crashed so low it was time for a 10-for-one consolidation.

Accounting for both of those, RBS shares have dropped from an effective price of £68.45 apiece at the end of September 2004, to just 368p a decade later! That’s a cringe-making fall of 95%, and £10,000 invested in shares back then would be worth just £538 today!

Now, this is the point at which I like to point out that share-price appreciation alone is not the whole story, and I reveal what a handsome addition you’d have had from 10 years of dividends!

Er, what dividends?

Well, I know, you’re ahead of me. RBS’s dividend before the crash was low, and it was stopped altogether as part of the bail-out deal. In total, you’d have had only an extra £211 in cash to add to your pot.

But as it happens, RBS’s share price performance was so abysmal, that would have actually bumped your pot from that £538 as far as £749. Whoa, party time!

Actually, you’d have done better to spend your dividend cash on a very modest party than do what is usually more sensible, which is to reinvest in more RBS shares each year. I know we’re talking about only £211, but buying more shares before the crash would have lost you most of that.

You’d have lost that too

In fact, you’d have dropped £185 of your dividend returns, and you’d be left with an investment worth just £564.

If you did invest in RBS all that time ago, I do hope it was only a small portion of a well-balanced portfolio.

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Alan Oscroft has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.