Most investors understand that the best place to store their long-term savings (money they don’t plan to touch for 10 years or more) is in some kind of asset, whether it’s a business they have founded, a home they have purchased, or equity in someone else’s business in the form of stocks.
If you factor out the first option, founding a business (very few of us are destined to be entrepreneurs, after all), then what you’re left with is real estate and stocks.
Historically, both have been great vehicles for growing wealth in Britain. According to This Is Money, both options have done similarly well since 1985. Stocks have grown their investors’ money by about 433 per cent, and real estate investments have grown their owners’ wealth by 402 per cent.
There are two important caveats to these numbers, though:
● The stocks figure doesn’t take into account reinvestment of dividends. When you do, you see that stocks have actually grown their investors’ wealth, on average, by 1433 per cent.
● That 32-year time frame doesn’t do justice to the 21st Century property boom in the UK. From 2000 to 2014, real estate outperformed stocks in Britain.
In 2017, there are some lingering questions that will have real effects on both property values and equities. How will Brexit affect home values? How will American president Donald Trump affect global business?
Even in times of uncertainty, though, equities and real estate have proven durable, at least in the long run. The key, as the team at Stock Hax demonstrates in an infographic below, is to strike a balance between stock investments and real estate … and that balance depends on your own goals and your own lifestyle needs.
Whatever the case, however, do investment your money somewhere. Otherwise, you expose your cash stores to the ravages of inflation, leaving your family and your future self with much less money than you might have imagined.