Plus some good reads from around the web.
Given the competing attractions of street parties in the rain and watching News 24 to spot Prince Philip putting his foot in it, I doubt many will see this edition of Weekend Reading.
Although you are here. Thank you! I won’t overstay my welcome.
Here’s my bit for the Jubilee – a bunch of statistics about investing over the Queen’s 60-year reign, followed by the usual roundup of links.
The UK stock market’s glorious 60-year run
- £1,000 put into the UK stock market six decades ago would now be worth in excess of £1 million, assuming all dividends were reinvested.
- That’s equivalent to a compound return of 12% a year.
- £1,000 of gold bought in 1952 would now be worth £81,360.
- Shares were cheap in 1952. Glaxo Laboratories (the forerunner to GlaxoSmithKline) was on a P/E of 2! Low valuations do wonders for future returns.
- British Motor Corporation, formed in 1952 by the merger of Austin and Morris, controlled 50% of the UK car market, and was valued at £35 million.
Source: Telegraph and The Motley Fool (see links below).
Savers victorious
- Savings now stand at an average of over £150,000 per household, including pensions, investments and deposit savings, compared with just below £50,000 in 1951 (at today’s prices).
- Households have saved an average of 6% of their net income since the 1950s.
- Contrary to how I think it should work, we save more in the bad times. Households saved just 1.2% of income in the 1950s, compared to 7.4% in 2011 and 12.2% in 1980 – both periods when the UK was in recession.
- Wealth in the UK [1] wasn’t evenly spread then or now. In 2011, almost one in three UK households had no savings, while a further fifth had less than £1,500.
- Household savings recorded their biggest rise in value in the 1980s, with a real increase of 115%.
- Savings fell 12% in the 1970s in real terms due to ruinously high inflation.
- Deposit savings’ share of total savings has fallen from 42% to 29% since 1951. Pensions and life insurance’s share has more than doubled from 24% to 53%.
- The gross interest rate offered on no notice accounts has averaged 6.01% over the past 60 years. But in real terms, savings rates averaged 0.29%.
- 1950s ‘Savers’ clubs’ were popular ways to save for Christmas and holidays, even though they paid no interest!
Source: Lloyds TSB.
House prices since 1951: We are not amused
- House prices across the UK have nearly trebled over the past 60 years, up by an average of 186% in real terms.
- Prices have risen at an average annual real rate of 1.8%, slightly faster than the 1.6% per annum average rise in real earnings.
- In nominal terms the average UK house price has increased 7,278%, from £2,200 in 1951 to £162,338 in 2011.
- London has seen a real rise of 189% in just the past 40 years.
- House prices recorded their biggest increase in the 1980s, with a real rise of 42% between 1981 and 1991. That’s greater than the increase of 30% during the last ten years.
- The worst performing decade was the 1950s. House prices declined by 7% in real terms.
- House prices have been the highest in relation to people’s earnings over the last ten years. Prices averaged 4.8 as a multiple of gross annual average earnings between 2001 and 2011, peaking at the highest level in the past 60 years at 5.8 in 2007.
- This compares with the average ratio of 3.9 since 1951.
- Property values were lowest in relation to earnings in the 1990s, when the average house price to earnings ratio [2] was 3.4.
- The number of houses built each year has fallen by one-third since 1951.
- In 1947, more than four in ten households lacked a fixed bath or shower. By 1991, this proportion had fallen to just three in a thousand.
- Nearly two in three households (64%) were without a basic hot water supply in 1947. By 1991, this proportion had fallen to one in a hundred.
- Home ownership has more than doubled over the past 60 years, from 32% of all households in England in 1953 to 66% in 2010-11.
Source: Halifax / Lloyds TSB press release.
Oh, and finally English farmland is up 10,745% over the past 60 years, according to agents Frank Knight [3].
Enjoy the bunting!
From the blogs
- Financial independence: 23 years later – Mr Money Mustache [4] (guest post)
- A good enough portfolio really is good enough – Oblivious Investor [5]
- Why nobody knows if you should buy Facebook stock – Rick Ferri [6]
- Information begets efficiency – Five Cent Nickel [7]
- The wrong way to use a tracker – The Psy-Fi blog [8]
- Your disaster fund and the best places to hide your money – Len Penzo [9]
- Westfield shopping centre on a £1.75 budget – Simple Living in Suffolk [10]
Book of the week: “God save the Queen”, sang the Sex Pistols. “The fascist regime”. If all this flag-waving makes you want to dye your hair green and urinate on a red post box, then read the classic England’s Dreaming by Jon Savage. It’s only 99p on Kindle [11]
Mainstream media money
- Facebook IPO a brilliant disaster – New York Times [12]
- Jubilee special: 60 years of British blue chips – The Motley Fool [13]
- European shares: A moment for contrarians – The Economist [14]
- India’s economy in difficulty [like China’s [15] and Brazil’s [16]] – The Economist [17]
- Data from US, China, and Europe raise fears of a slowdown – FT [18]
- Mortgage woes for expats returning from Spain and Greece – FT [19]
- Buy in Europe while others are panicking – FT [20]
- Interesting value-index tracker (but it’s a synthetic note) – FT [21]
- Interactive Investor (iii) has introduced quarterly fees – FT [22]
- Investment trust’s record over the Queen’s reign – Telegraph [23]
- Should you try to squeeze a pension from your home? – Telegraph [24]
- Tenants in regulated ‘Fair Rent’ properties sitting pretty – The Guardian [25]
- Hargreaves Lansdown evidence on workplace pensions [Dry!] – Parliament [26]
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