This is how much £1k invested in a FTSE 100 tracker 5 years ago would be worth now

first_img I’m sure you’ll agree that’s quite the statement from Motley Fool Co-Founder Tom Gardner.But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.What’s more, we firmly believe there’s still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.And right now, we’re giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool. Roland Head has no position in any of the shares mentioned. The Motley Fool UK owns shares of and has recommended Berkshire Hathaway (B shares) and recommends the following options: long January 2021 $200 calls on Berkshire Hathaway (B shares), short January 2021 $200 puts on Berkshire Hathaway (B shares), and short December 2020 $210 calls on Berkshire Hathaway (B shares). Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors. Image source: Getty Images “This Stock Could Be Like Buying Amazon in 1997” I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement. Simply click below to discover how you can take advantage of this. This is how much £1k invested in a FTSE 100 tracker 5 years ago would be worth now Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we’re offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our ‘no quibbles’ 30-day subscription fee refund guarantee.center_img Our 6 ‘Best Buys Now’ Shares Roland Head | Sunday, 6th December, 2020 | More on: ^FTSE Enter Your Email Address Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge! See all posts by Roland Head US billionaire investor Warren Buffett has often said that a cheap index fund is the best stock market investment for most investors. In the UK, the obvious choice is a FTSE 100 tracker.As its name suggests, a FTSE 100 tracker fund will aim to match the performance of the FTSE 100 index, which contains the 100 largest companies listed on the London Stock Exchange. When the market’s going up, the benefits are obvious. You don’t have to pick winners. Instead you profit by owning all the shares in the market.5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…And if you click here we’ll show you something that could be key to unlocking 5G’s full potential…However, this year has seen the biggest stock market crash since 2008. Does Mr Buffett’s advice still add up?To find out, I’ve crunched the numbers to find out how much a £1,000 investment in a FTSE 100 tracker in 2015 would be worth today. I think you might be pleasantly surprised.The FTSE 100 is upFive years ago, the FTSE 100 was trading at around 6,240. When the market closed on Friday, it was hovering around 6,550. That tells me that the total value of the companies in the market has risen by about 5% over the last five years.That’s not a disaster, given the size of this year’s crash. But I think it’s fair to say that a 5% gain would in normal times be a disappointing result for five years’ investment. I certainly expect better results from my portfolio.Fortunately, share price gains aren’t the only return investors receive from a FTSE 100 tracker. An index fund of this kind also collects dividend payouts from all the companies in the index. These are then grouped together and paid out to investors in the fund. This usually happens every six months.The power of dividendsIt’s tempting to dismiss dividends as pocket money. I’ve heard investors say that they just use their dividends to cover their trading costs.This might be true for speculative small cap stocks. But for the big companies in the FTSE 100, dividends are a serious business. Investors can make real money by reinvesting these payouts (or withdrawing the income).A number of FTSE 100 dividend stocks have cut their payouts this year, but the index still offers a dividend yield of about 3.7%. That’s better than any savings account I know of.The combination of share price gains and dividend income is known as total return. I’ve dug into the numbers provided by FTSE Russell, the organisation which compiles the FTSE 100 index. These show that over the last five years, the total return from the FTSE 100 has been 20%.This means that a £1,000 investment in a FTSE 100 tracker in December 2015 would be worth about £1,200 today, excluding fees.Buffett’s advice could boost returnsIn this article I’ve looked at a simple example where one investment was made. But like most working people, what I do in real life is to make smaller, regular investments into my Stocks and Shares ISA.Happily, this is what Mr Buffett recommends for most investors. Back in 1993, he said that “by periodically investing in an index fund”, amateur investors “can actually outperform most investment professionals”. That’s good enough for me!last_img read more