Value of £2000 invested every year since 1970?

[nomisesor]

Apologies for citing the Wail but I was interested by this story of the man who "didn't trust banks" so kept as cash the £2000 he saved each year over 40 years...and lost it by leaving it in a bag on the roof of his car.. (rather unbelievable, as I can't imagine that a panel beater would earn £2000, let alone be able to save £2000 p.a. in the 1970s).

http://www.dailymail.co.uk/news/article-1332644/Pe...

Anyone able to calculate how much £2000 p.a. invested since 1970, all dividends reinvested, would be worth now, had it been placed in, say, a mainstream managed UK fund? It must be 7 or even 8 figures.... that might cheer him up - he only lost £80k, when, if he'd placed his trust in the City, it could have been x millions!

[Wacky Racer]

Just to give you an idea, a brand new Jaguar XJ6 was just over £2000 in 1969/70.

[AdeTuono]

nomisesor said:

Anyone able to calculate how much £2000 p.a. invested since 1970, all dividends reinvested, would be worth now, had it been placed in, say, a mainstream managed UK fund? It must be 7 or even 8 figures....

>£10,000,000?

[NoelWatson]

Not sure how easy to calculate, as I can't find total return indices data going back to this time.

FT ALL Share closed 1969 @ 147, currently 2861. On 1/1/86, it was 683
FTSE 100 TR was 356 on 1/1/86, currently 3609

[V8mate]

£24,220

http://www.thisismoney.co.uk/historic-inflation-ca...


Edit: Sorry mis-read question. Didn't realise you were adding £2k each year.

Edited by V8mate on Wednesday 1st December 08:19

[NoelWatson]

V8mate said:

£24,220

http://www.thisismoney.co.uk/historic-inflation-ca...

Doesn't mention stock market in there unless I'm missing something

[Dave9]

£5m assuming 7% rate of return

http://www.calcudora.com/regular-savings-calculato...

[Fittster]

Dave9 said:

£5m assuming 7% rate of return

http://www.calcudora.com/regular-savings-calculato...

But it's more complicated than that as you'd need to factor in tax on savings. Over 40 years that will have changed many times making the final figure rather difficult to work out.

[V8mate]

Dave9 said:

£5m assuming 7% rate of return

http://www.calcudora.com/regular-savings-calculato...

£2kpa over 40 years at 7% compound. The calculator came out with £427,219.14, so <£0.5m

[NoelWatson]

V8mate said:

Dave9 said:

£5m assuming 7% rate of return

http://www.calcudora.com/regular-savings-calculato...

£2kpa over 40 years at 7% compound. The calculator came out with £427,219.14, so <£0.5m

Surely the clue here is "dividends reinvested"??

[V8mate]

NoelWatson said:

V8mate said:

Dave9 said:

£5m assuming 7% rate of return

http://www.calcudora.com/regular-savings-calculato...

£2kpa over 40 years at 7% compound. The calculator came out with £427,219.14, so <£0.5m

Surely the clue here is "dividends reinvested"??

And how does that calculator help with that calculation?

[croyde]

Probably not much if it were looked after by the same c0cks that looked after my endowment.

[NoelWatson]

V8mate said:

NoelWatson said:

V8mate said:

Dave9 said:

£5m assuming 7% rate of return

http://www.calcudora.com/regular-savings-calculato...

£2kpa over 40 years at 7% compound. The calculator came out with £427,219.14, so <£0.5m

Surely the clue here is "dividends reinvested"??

And how does that calculator help with that calculation?

I've no idea why we are using an RPI calculator in the first place

[CzechItOut]

Dave9 said:

£5m assuming 7% rate of return

http://www.calcudora.com/regular-savings-calculato...

I think you were adding £2,000 monthly, instead of annually in order to get to £5,002,859.56

[Marky Boy]

£85,280 @ 4% interest according to excel.

HTH

[nomisesor]

Sorry for any confusion - my question was £2000 p.a. in a managed [UK] equity fund (or tracker, take your pick, though trackers probably weren't available 40 yrs ago) all dividends re-invested - so NOT a cash fund with a simple x% p.a. compound interest.... I expect that the results would be very interesting.

[jeff m]

Easy...assuming quartely componding at say 6%
1st quarter: 2000 x 0.015 =30 (2,030)
2nd q 2030 x 0.015 =30.45 (2,060.45
3rd 2,091.36
4th 2,122.73
Year 2 1q 4122.73 x 0.015 =61.84 4,184.57

Oh look batteries low on my calc, can someone else take over

[NoelWatson]

nomisesor said:

I expect that the results would be very interesting.

I gave you an estimate above

[DavidHM]

Assuming that the amount saved increased consistently by 6% PA he'd have had to start saving £517 in 1970 and so on to end up with £80k in 2010, by which time he'd be saving £5k annually.

If invested at 7% PA, that would now be £260k.

So yeah, it's easy to feel sorry for the old bloke and the £80k he chucked away on his car roof - but he'd already done himself out of £180k by deciding to forfeit interest.

[nomisesor]

Well, using this calculator http://www.moneychimp.com/features/market_cagr.htm (S&P 500 but otherwise seems OK - I think dividends reinvested and inflation accounted for) I make it

£346,460

up to the end of December 2009.

Similar to the result those who suggested 7% - not surprising given that that figure was derived from this sort of historical data. Less than I expected, but the figures all, (bar investments in 2003 and 2009) since 1999 are negative - still, better than £80k.