For evidence, consider that a £7,000 investment made five years ago in a FTSE 100 index fund that reinvests dividends would be worth roughly £12,500 today. That’s an annualised return of approximately 12.2%.

Admittedly, that’s far higher than the historical average. But even someone who invested a decade ago would have pocketed a solid return. By now, the seven grand would have more than doubled, becoming almost £16,500 (before fees).

With the cost of living rising relentlessly, such inflation-beating returns are more important than ever.

Could it have been even higher?

Remember, these are market averages. Had someone instead picked a portfolio of individual shares, including some top-performers, the returns may have been much higher.

To see why, take a look at the 10 best-performing FTSE 100 stocks from the past decade:

It’s worth mentioning that these numbers don’t include dividends. Add those in, the returns shoot even higher!

Of course, it’s impossible to know in advance which shares will become the best performers. But just a couple of these could have significantly boosted a portfolio, resulting in major outperformance.

A hedge against AI volatility?

Lately, the FTSE 100 has also acted as a bit of a hideout from AI volatility across the pond. For example, on Friday (17 July), the tech-dominated Nasdaq-100 and S&P 500 indices fell 1.5% and 1%, respectively, as semiconductor stocks slumped.

By contrast, the FTSE 100 actually edged higher due to its low tech exposure. And while it wouldn’t emerge totally unscathed from a proper AI/chip stock meltdown at some point, it’s likely to hold up better than tech-heavy indices.

An ETF to consider buying

Investors interested in the FTSE 100 index could consider the iShares Core FTSE 100 ETF (LSE:CUKX). This version reinvests dividends back into the fund.

The top five holdings today are HSBC, pharma giant AstraZeneca, Shell, Rolls-Royce and consumer goods titan Unilever. This globe-trotting quintet makes up roughly 33.5% of the ETF, so there’s heavy concentration at the stock level, which adds risk.

Indeed, that’s actually more than the S&P 500, where the top five ‘only’ account for around 28.5%. However, while the S&P 500 has a heavy weighting to a single industry (technology), the top of the FTSE 100 is spread across different sectors.

Again, this makes it far less exposed to a tech stock crash.

Another thing I like is that the index isn’t particularly expensive today. The price-to-earnings (P/E) ratio is 17.6, versus 30.3 for the S&P 500, and the starting dividend yield is a respectable 3%.

Meanwhile, the few Footsie tech stocks it does hold look great value. Sage and RELX are trading at P/E multiples of 21.4 and 22.3, falling to 15.2 and 16.7 on a forward-looking basis.

To conclude, I reckon this passive FTSE 100 index tracker is worth considering for a portfolio, alongside hand-picked individual shares. There are plenty of ideas here at The Twelfth Magpie.

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One of our Share Advisor analysts has just released a brand new stock report that we think is a must-read for any investor looking to try and generate potential income.

And the best bit is that you can see if for yourself, right now, absolutely free of charge!

No jargon. No hard sell. Just a clear look at an income share we think is worth your time.

Ben McPoland owns shares in 3i Group, AstraZeneca, Games Workshop, HSBC, Rolls-Royce, Sage, and Scottish Mortgage.

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Quite a lot, if you’re the British government at least. It’s why savers’ allowances will plummet to £12,000 per year from next April. That’s down from the £20,000 that Cash ISA limits users have enjoyed since 2017.

The change is designed to encourage Brits to invest instead of clinging onto cash. And though I don’t like the government’s ‘stick’ approach, if it means more people build long-term wealth with Stocks and Shares ISAs, it’s something I’d be happy to forgive.

As I’ll show you, seeking the security of cash can end up costing you a comfortable retirement.

Cash vs stocks

During the past five years, the average Cash ISA interest rate has been roughly 3%. At this rate, someone maxing out their £20,000 allowance each year would have £129,503 at the end of the period.

That’s not to be sniffed at. However, compared with the wealth many investors have generated with Stocks and Shares ISAs over the same period, it’s a reminder that ‘playing it safe’ can come at a huge cost.

Let’s say someone put £20,000 into a FTSE 100 tracker fund each year for the past five years instead. Based on the index’s 12.3% return (combining capital gains and dividends), that investor would be more than £37,000 better off than our cash saver, with a impressive £166,528.

Time to bin the Cash ISA?

Don’t get me wrong. Cash ISAs play an important role in helping investors balance their wealth based on risk and return. My fear is that too many people are over-reliant on cash savings. And this creates dangers of its own.

As Fidelity notes

While cash feels safe, it comes with a silent risk: that your money doesn’t grow at all.

This can see the real value of your savings pot eroded by inflation, and leave you with insufficient money for retirement. On the other hand, a carefully-chosen investment strategy can help you manage risk and target financial independence later on.

A 9% wealth opportunity?

Our Footsie-tracking exchange-traded fund (ETF) provides a perfect example of how to achieve this. Products like the iShares Core FTSE 100 ETF (LSE:CUKX) may fall when broader stock markets dip. But their diversified models can still provide robust and steady returns over the long term.

For instance, a FTSE 100 tracker is well diversified by geography, holding multinational shares (like HSBC, Rolls-Royce) along with ones that focus on specific regions (National Grid). They also provide exposure to a variety of sectors — think of companies as diverse as Diageo, Vodafone, BAE Systems, and AstraZeneca.

Finally, these Footsie trackers also contain a blend of growth, value, and dividend shares. The former two can surge in value during stock market rallies, while income stocks may provide solid returns even during downturns. The result? A smooth and substantial outcome across the economic cycle.

The FTSE 100’s 12.3% annual return since mid-2021 is high by historical standards. But even if the index manages a more typical 9% return in future, it will still significantly outperform any Cash ISA.

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No jargon. No hard sell. Just a clear look at an income share we think is worth your time.

Royston Wild owns shares in HSBC and Diageo.

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The idea is to encourage more savers to invest in the stock market, which over longer periods of time wipes the floor with cash in terms of returns. Indeed, cash rarely even beats inflation, meaning savers lose real purchasing power.

But which is winning so far this year — cash or stocks? Let’s find out.

Cash

To start, I should make clear that I’m certainly not against Cash ISAs. As an investor, you don’t want to be forced to sell quality stocks to pay for a new car or unexpected tax bill. A cash buffer can certainly provide peace of mind.

Average Cash ISA interest rates throughout 2026 have generally been between 3.5% and 4.5%. Based on this then, £10,000 put into one at the start of 2026 would have generated somewhere between £175 and £225 in interest so far, depending on the type of account you chose.

By the end of the year, that £10k should have generated a total of roughly £350 to £450 in completely tax-free interest. That would be an okay result, albeit inflation is expected to average around 3% this year, according to the Bank of England.  

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

Shares

What about the stock market? How has that fared in comparison?

Well, it depends on how you define the stock market, but below are three popular blue-chip indexes and how they’ve performed year to date.

As we can see, all three have beaten cash so far, particularly the Nasdaq-100. A £10,000 investment made in this tech-heavy index at the start of the year would now be worth around £11,800.

But none of these returns include dividends. Adding income to the mix, the Footsie’s year-to-date return rises above 7.5%, thereby also comfortably beating cash.

An ETF idea

Of course, nobody knows what the rest of the year will bring. The stock market could well end up pulling back sharply, especially the US indexes, which are currently trading very expensively.

But zooming in on the FTSE 100, is this worth considering for a Stocks and Shares ISA? I think so, especially if the fund is an accumulating one in the shape of something like iShares Core FTSE 100 ETF (LSE:CUKX).

In other words, the dividends are accumulated/reinvested back into the fund, helping fuel the compounding process. The FTSE 100’s starting yield today is around 3.05%.

Top holdings mirror the UK’s largest listed firms, including HSBC, AstraZeneca, Shell, Unilever, and engine maker Rolls-Royce. What I like here is that each represents a different part of the global economy — banking, pharmaceuticals, oil and gas, household goods, and aerospace and defence, respectively.

For me, this diversification is attractive. If there is an AI bubble and it pops, I would expect such names to hold up better than many tech shares.

That said, it’s worth mentioning that almost 28% of the fund is in the financials sector. So a global economic downturn at some point could impact performance and dividend reliability.

Despite this risk, I prefer the FTSE 100 over cash long term, making the index one to consider allocating some money to.

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One of our Share Advisor analysts has just released a brand new stock report that we think is a must-read for any investor looking to try and generate potential income.

And the best bit is that you can see if for yourself, right now, absolutely free of charge!

No jargon. No hard sell. Just a clear look at an income share we think is worth your time.

Ben McPoland owns shares in AstraZeneca, HSBC, and Rolls-Royce.

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You may have missed fresh research from the Pensions Commission last month. If you read it, you’re unlikely to have forgotten its shocking findings. It found that up to 19m people in the UK are not saving enough for retirement.

Even more alarmingly, it said this number could be even higher…

What did it say?

According to the Pensions Commission:

Many people are not saving enough for retirement, particularly among low and middle earners, the self‑employed and women… leaving large groups across the UK facing a severe cliff-edge when they retire

The Commission’s findings included:

• Only half of low-to-middle earners save at minimum Auto Enrolment levels for their workplace pension.
• Eighteen million people (equating to 45% of working-age adults) aren’t contributing to a pension at all.
• Just 4% of self-employed people are saving for retirement.

It left Minister for Pensions Torsten Bell to comment: “Tomorrow’s pensioners [are] on track to be poorer than today’s.”

Different ISAs

Times are tough, and setting extra money aside for retirement is difficult for many people. It’s not just that millions are ‘sleepwalking’ into pensioner poverty as a lot can’t afford to save or invest as the cost of living rises.

But it isn’t impossible to build a healthy nest egg for retirement, even if you’re starting your journey late. It depends on where you put your money, and whether you’ve come up with a well-rounded investment strategy. It’s possible that simply saving in a low-yielding Cash ISA won’t get the job done.

Why? The returns here have averaged just 1.21% a year over the last decade. If you want to get serious about building a financial buffer for retirement, you should consider focusing on a Stocks and Shares ISA.

A better strategy?

During the last 10 years, these products have provided an average annual return of 9.64%. They offer the same tax advantages of the Cash ISA, but by harnessing the power of the stock market they can generate significant retirement wealth.

Even someone who invests £250 a month could build a pot of £181,213 after just 20 years, based on that 9.64% figure. That would then generate a £12,685 passive income if invested in 7%-yielding dividend shares.

To put that in context, that’s more than the full UK State Pension currently provides.

A top fund

On the downside, the Stock and Shares ISA carries higher risk than its cash equivalent. But investing in a wide range of stocks significantly reduces the danger.

Funds such as the iShares FTSE 100 ETF (LSE:CUKX) are a simple way to achieve this, by instantly spreading investors’ cash across hundreds of companies. It’s also a pretty cheap one to consider — the ongoing charge here is 0.4%.

Over the last decade, the FTSE 100‘s delivered a robust average annual return of 9.4%. This is thanks to solid capital gains and the passive income provided by dividend heroes such as Legal & General, HSBC and National Grid.

Even well-diversified funds like this aren’t immune to certain pressures. This fund could, for instance, drop if a global economic downturn dents the earnings of FTSE-listed shares. But looking long term, I’m expecting its diversified collection of blue-chip companies to keep rising and generating big returns for ISA investors.

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Royston Wild owns shares in Legal & General and HSBC.

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Here, I’m going to reveal how much £10,000 invested in a Footsie index tracker at the start of March would now be worth. Let’s crunch the numbers.

The index has tanked

There are a number of FTSE 100 tracker products available today. I’m going to focus on the iShares Core FTSE 100 UCITS ETF (acc) (LSE: CUKX).

I’ve chosen this one because it’s quite popular with UK investors. It also reinvests all dividends from Footsie companies meaning that share price performance gives us an idea of total returns (gains plus dividends).

Now, this ETF ended February at a price of 22,040p. So, let’s say an investor was able to buy at that price and they invested £10,000 in it.

Today – roughly three weeks later – that £10,000 would be worth about £9,140 (almost 9% less). Because as I wrote this on Friday (20 March) afternoon, the ETF’s share price is 20,135p.

The takeaways

Now, I’m not saying that this is a bad product (it’s a solid product that could be worth considering for a portfolio). Volatility like this is part of investing.

But there are a few key takeaways from these numbers. One is that a simple index tracker which is only focused on one geographic market like this doesn’t guarantee portfolio success.

By including a range of different ETFs and/or individual stocks in a portfolio, investors could have potentially obtained better returns. I’ll point out that one of my favourite ETFs, the HANetf Future of Defence ETF (another product worth considering) is actually up for the month so this could have provided some portfolio protection.

Another takeaway is that it can pay to drip feed money into the market slowly. Had the investor put £3,000 into the Footsie tracker fund at the start of the month instead of £10,000, they could potentially put another £3,000 in today at much lower prices and then another £4,000 at a later date, smoothing out their entry prices (I’m assuming here that they weren’t putting £10,000 into the market regularly).

What’s next for the FTSE 100?

Will the FTSE 100 bounce back? I think so – history shows that it’s able to recover from turbulence like this.

However, at this stage, it’s hard to know if we’ll see a ‘V-shaped’ recovery. If the Middle East conflict drags on and oil prices remain elevated, the index could remain under pressure (high oil prices tend to hurt economic growth).

So, I think the key is to remain diversified and think long term (and potentially consider buying opportunities). If you’re looking for ETF and stock ideas for portfolio diversification, you can find plenty of information right here at The Motley Fool.

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This is obviously great for UK investors, many of whom have their ISAs and SIPPs stuffed with FTSE 100 shares. But is this an Indian summer that’s set to come to a frosty end? Or have we entered a new financial climate altogether?

What’s going on?

So far in 2026, the FTSE 100 has gained 6.5% while the S&P 500 has dipped 0.9%. However, Footsie companies pay far higher dividends on average, and when we factor those in over the past five years, the two indexes are almost level on a total return basis.

This is some turnaround, though the US index is still the longer-term winner, primarily due to the massive gains from tech stocks like Microsoft, Apple, Broadcom, Nvidia, and Tesla. The powerful digital revolution that has swept the globe has created stock market juggernauts akin to corporate nations.  

However,  after two and a bit years of the AI boom, investors are getting nervous about whether these companies can actually monetise the technology fast enough to justify their massive capital outlays and valuations. 

As a result, money has been moving out of Silicon Valley and into ‘old economy’ stocks like banks, utilities, oil majors, miners, and supermarkets. These pay dividends and trade at much cheaper valuations.

Of course, these are exactly the kinds of stocks writers here at The Motley Fool have been championing for years. They have looked fundamentally undervalued for ages and also paid generous dividends.

Moreover, these non-tech firms are seen as AI-resistant. That is, they’re ‘heavy-asset, low-obsolescence’ (HALO) companies insulated from technological disruption. 

Global investors are finally starting to wake up and see the (HALO) light!

Can it continue?

Of course, the stock market goes in cycles, so rotations from growth to value stocks is nothing new. If investors flipped back towards high-growth shares, the FTSE 100 could start underperforming again (at least relative to the S&P 500).

However, the rapid development of AI technology — particularly with autonomous agents — continues to spook investors. So the rotation towards FTSE 100 shares still has legs, in my opinion.

Therefore, investors could consider something like the iShares Core FTSE 100 UCITS ETF (LSE:CUKX). As we can see below, this index tracker has really taken off over the past few months.

This accumulating version of the ETF automatically reinvests any dividends paid by the companies (like Shell, Legal & General, and HSBC) back into the fund. Currently, the FTSE 100 offers a 3% dividend yield, so reinvesting this alongside any share price gains helps the fund grow faster over time. 

To my mind, there’s a rock-solid mix of high-quality dividend stocks in the FTSE 100, ranging from HSBC and Tesco to Aviva and Admiral.

As mentioned, the FTSE 100 could always go out of fashion again. So I would only consider a Footsie index tracker as part of a diversified ISA portfolio that also had a few growth stocks in there.

The post Why is the FTSE 100 suddenly beating the S&P 500? appeared first on The Twelfth Magpie.

Over five years, the return is also very good — 61.1% before dividends.

But what about the 10-year return? How much would someone have if they’d invested £5,000 into the FTSE 100 a decade ago? Let’s find out.

Impressive returns

Over the past 10 years, the annualised total return of the FTSE 100 has been 10.1%. The total return includes dividends as well as price gains.

Therefore, a FTSE 100 index tracker would have turned £5,000 into roughly £13,000. Nice.

The vast bulk of these gains have come more recently, with the index gaining nearly 40% in just two years. A big part of this has been global investors seeking diversification away from the US stock market due to three main reasons.

The first is President Trump’s unpredictable announcements and policies. Another thing that has boosted the FTSE 100 is its relative immunity to AI disruption — it’s packed with cheap non-tech shares that pay generous dividends.

Only around 1% of the index is officially classified as information technology. Most of it consists of banks, miners, oil majors, and pharma giants. These aren’t in theory threatened by AI, and should even benefit from it.

In other words, the FTSE 100’s lack of tech exposure — long been seen by many as its Achilles’ heel — has quickly become a strength. By contrast, tech accounts for more than 30% of the S&P 500, helping explain the sudden departure in performance.

Lastly, the FTSE 100 is still quite cheap, at least compared to the S&P 500.

Footsie tracker

So, is the FTSE 100 still worth considering for the next 10 years? I think so, and investors could look at the iShares Core FTSE 100 UCITS ETF (LSE:CUKX).

This version is an accumulating ETF, which means dividends are automatically reinvested back into the fund. The trailing yield is currently around 3.1%, but the income growth prospects look strong for the FTSE 100.

According to AJ Bell, pre-tax profits across the index in 2026 could exceed £231bn. This should underpin dividends and share buybacks, which have also helped boost the value of many companies by making them more profitable on a per share basis.

When I look at the top of the FTSE 100, I see a few firms that should become larger over the coming decade. These include HSBC, which has a strong position across fast-growing Asia, and oncology giant AstraZeneca.

Rolls-Royce also has a bright future, with growth opportunities across civil aviation (rising global travel trends), defence, and small modular reactors (SMRs). The stock is pricey right now, but this matters less inside a tracker fund (as it’s just one of many).

Meanwhile, I’m convinced that miners will become more valuable in future. Due to surging demand for copper and the lack of new mines, there’s expected to be a supply deficit for the red metal.

The FTSE 100 is home to mining giants like Antofagasta, Glencore, Rio Tinto, and Anglo American.

While a sudden rotation away from value to growth is a risk for the FTSE 100, I think the ETF is worth considering for long-term investors.

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The New Year could see further stunning gains as investor confidence booms. But beware: enormous gains like we’ve seen last year could also prompt a sharp pullback.

Yet I’m still confident that 2026 could be a pivotal year in creating a new wave of ISA millionaires. And it has nothing to do with how stock markets may perform. What could I possibly be talking about?

Investing taking over?

From April 2027, the annual allowance on the Cash ISA will be slashed from £20,000 currently to £12,000. We’re some way off that date, but November’s announcement has already sparked a wave of panic among UK savers.

Like many Cash ISA users, I don’t like the plans. Even though I don’t get anywhere close to using the yearly, I prefer the ‘carrot’ instead of the ‘stick’ approach when guiding people on how to use their cash.

That said, I understand the government’s determination to nudge people from low-yielding savings accounts. It’s already ignited interest in products that could generate higher, and even life-changing, returns. As a stocks investor myself, I think that’s a good thing.

I’m hoping 2026 will be the year that a new wave of stock market millionaires emerges.

Millionaire boom

We all dream of making a fortune with share investing. I’m sure that’s the reason you’re here reading this. But it isn’t a pipe dream, as recent research from Plum shows.

There are currently 5,070 ISA millionaires recognised by HMRC, the number having grown by more than 1,000% in just seven years. It’s a list overwhelmingly dominated by Stocks and Shares ISA investors, who’ve enjoyed the tax benefits also enjoyed by Cash ISA users but have harnessed the wealth-building power of the stock market.

Since 2015, the average annual return on the investing ISA is a whopping 9.64% (according to Moneyfacts). That kind of performance can turn even a relatively modest monthly investment into a seven-figure portfolio over time.

Someone investing £478 a month could generate a £1m pension pot after 30 years, based on that impressive figure.

Buying the FTSE 100

Stock market investing involves higher risk than saving cash. But individuals can buy tracker funds like the iShares FTSE 100 ETF (LSE:CUKX) to limit volatility and target brilliant returns.

Like any shares-based fund, this product can drop during a broader market downturn. However, by diversifying across the whole FTSE 100 index, investors can protect themselves from company-, sector- and region-specific shocks.

And the beauty of exchange-traded funds (ETFs) like this is that they offer these risk and reward benefits at very low cost. The yearly management fee on this product is a rock-bottom 0.7%.

Including dividends, this FTSE 100 fund’s delivered an average annual return of 13% over the last five years. For both new and existing investors, I think it’s a top option to consider to target stock market riches.

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While American markets have wobbled, an index tracker closer to home has stolen the show.

The iShares Core FTSE 100 ETF’s (LSE: CUKX) up 13.8% year to date, compared with the S&P 500’s 9.3% gain. That makes it one of the world’s best-performing ETFs so far this year.

Its top holdings by weight are a Who’s Who of British blue-chips: AstraZeneca (7.81%), HSBC (7.39%), Shell (7.14%), Unilever (5%) and Rolls-Royce (4.1%). The expense ratio is a very slim 0.07%, which means most of the returns are passed back to shareholders.

But it’s worth noting that this year’s stellar rise is unusual and doesn’t happen often. Since inception, the ETF’s delivered annualised returns of 7.41% — broadly in line with the average returns of the FTSE 100 (when including dividends). 

Over a decade, that works out to a cumulative return of 113.5%. Not bad for a low-cost, set-and-forget fund.

A better option?

Despite the strong showing from the ETF, I find myself more drawn to another fund entirely. The Scottish Mortgage Investment Trust’s (LSE: SMT) delivered even stronger gains so far in 2025, up 14.7% year to date. 

More importantly, its long-term track record’s far more impressive. Since September 2005, the trust has generated a remarkable 1,274% total return. That’s equivalent to annualised returns of 14% a year over the past two decades.

Of course, past performance is never a guarantee of future returns. The fund’s heavy exposure to US tech adds concentration risk and foreign currency risk if the dollar loses value.

But Scottish Mortgage has something that a straightforward FTSE 100 tracker cannot match — true global diversification. 

Yes, the portfolio focuses on high-growth technology names such as Nvidia, Microsoft and Meta. But it also invests in retail innovators including Meituan and MercadoLibre. Plus, it boasts healthcare plays such as Moderna and even private equity holdings including SpaceX and Databricks. 

This spread across industries and geographies helps cushion the trust from region-specific risks and exposes it to some of the world’s most exciting businesses.

What it means for investors

The S&P 500‘s long been regarded as the benchmark for equity performance. Yet in 2025, it’s been left behind by a simple FTSE 100 tracker — and the more adventurous Scottish Mortgage. 

That underlines the importance of looking beyond Wall Street when picking stocks. When building a portfolio with a multi-decade outlook, diversification’s critical to avoid extended losses from concentration risk.

For those eyeing a low-cost way to mirror the performance of the FTSE 100, the iShares ETF seems a sensible option to consider. 

But for investors who are willing to embrace a little more risk in exchange for higher diversification and growth potential, I think Scottish Mortgage could be an even better fund to look at over the long run.

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However recently, the UK stock market index has done pretty well. Here’s a look at how much an investor would have today if they’d chucked £10,000 in a Footsie tracker fund five years ago.

10% a year?

There are many different FTSE 100 trackers on the market today (including index investment funds and exchange-traded funds (ETFs). I’m going to zoom in on the iShares Core FTSE 100 UCITS ETF GBP (Acc) (LSE: CUKX).

The reason I’ve picked this one is that it’s an accumulation fund, meaning that all dividend income’s reinvested (for further gains).

Additionally, it’s an ETF with super-low fees (the total expense ratio’s just 0.07%). Often, ETFs have significantly lower fees than index investment funds (especially when you factor in platform charges).

Five years ago, this ETF was trading for £108. Today however, it’s trading for £174.

This represents a gain of 61%, meaning that the initial £10,000 investment would now be worth about £16,100. On an annual basis, that translates to a return of around 10%.

These returns ignore trading commissions and platform charges. But I’m sure you’ll agree, they’re decent. If you can consistently achieve a return of 10% a year, you can potentially double your money in around seven years. With that kind of return, wealth can be build quickly.

Long-term returns

However, before you rush out and invest in a FTSE 100 tracker fund like the one above, there’s an important thing to point out. And that’s five years ago, share prices were depressed due to the coronavirus.

The fact that share prices were low back then has made a big difference to the index’s returns. Normally, returns from the index aren’t this high.

Recently, I calculated the average return for the FTSE 100 (including dividends) over the last 10 calendar years and it came out at just 6.2%. That’s a little underwhelming, especially when you compare it to returns from other indexes such as the S&P 500 (around 12.7% a year in US dollar terms).

My view now

Given the underwhelming long-term returns from the FTSE 100 – which are largely the result of a lack of innovation in the index – I still believe a Footsie tracker isn’t the best investment out there today. While these tracker funds do have some benefits (they offer exposure to companies trading cheaply and paying big dividends) I think long-term investors are better off considering a global tracker or a US index fund if they’re looking for broad exposure to the market.

An allocation to individual stocks could also be worth considering. Stocks are riskier than index funds, but there’s potential for much higher returns.

Just look at Amazon (which I believe is worth considering today while it’s well off its highs). Over the last decade, it’s delivered a return of about 25% a year, turning a $5k investment into more than $45k.

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