FTSE hits record high. Two lost decades.

"UK stocks hit record high." reads the headline. The newspaper article goes on to say that the FTSE 100 passed 6880 shortly after the market opened today. What it didn't say was that for investors, the UK stock market has returned almost zero for over 20 years.

Exactly twenty years ago, the FTSE stood at 5601. So today's record represents a capital gain of just 22.8%. Over two decades.

Wiped out by inflation.

To many, this may seem irrelevant as they do not invest in stocks or stock market based mutual funds. However, this is where the largest proportion of pension monies are invested, so the lack of returns is hugely important.

This is why we firmly believe that property has an important role in wealth building and retirement planning.

Enter the Nationwide House Price Index. This is the UK's oldest running record of UK residential property prices, dating back to the 1970s.

Exactly twenty years ago, Nationwide's UK index stood at 169.0.

Their end of March figure was 444.6

An uplift of 163% - in monetary terms, a £100,000 property purchased 20 years ago is now worth £263,000. 

	Invested ​March 2001	Value ​March 2021	Capital ​Gain
FTSE 100	£100,000	£122,800	£22,800
Property - UK	£100,000	£263,000	£163,000
Property - London	£100,000	£328,000	£228,000
Property - East Midlands	£100,000	£295,900	£195,900

Since London often distorts UK-wide figures,  the figures for the East Midlands are included as a more 'typical' region.

If an investor had purchased his property using a mortgage strategy, he would have made very serious money indeed. Once he reaches retirement, rental provides an income which broadly keeps pace with inflation.

Caveat 1. FTSE stocks would have paid dividends, but equally, property would have generated rental income - broadly cancelling each other out.

Caveat 2. No piece about investment performance would be complete without "Past performance is no guarantee...."

If you are a stockpicker it is not impossible that you might choose the next Apple. But would you back your judgement with enough money to buy a house?