30 years after the “Big Bang”, UK stock market investors have reason to celebrate

This month marks the 30th anniversary of the “Big Bang” – not the cosmological theory, but the name given to the deregulation of the London Stock Exchange.

On 27th October 1986, the rules were changed and the effects were significant, arguably resulting in London becoming one of the world’s most important financial centres.

Someone investing in the UK stock market three decades ago would have been a ‘winner’. Recent analysis from Fidelity International shows that £10,000 invested then in the FTSE 100, the index for our largest companies, would be worth £126,867* today. If you had put the same £10,000 in the average UK savings account over the same period, it would be worth just £28,196*.

More adventurous investors opting to invest the £10,000 in the FTSE 250, the index for our medium-sized companies, would now have an investment portfolio worth £265,035*.

Commenting on the analysis, a Fidelity spokesperson said: “With interest rates at record lows and looking as if they could fall further, the adage that cash is king really doesn’t hold much water these days. UK savers looking to achieve decent long term returns really need to be looking further up the risk spectrum, investing in the slightly riskier bonds issued by companies rather than governments or moving into stocks and shares.”

*Source: Fidelity International, total returns, 31/08/1986 to 31/08/2016

Past performance is not a reliable guide to future returns. You may not get back the amount originally invested, and tax rules can change over time. The views of the author and any people interviewed are their own and do not constitute financial advice.