Some breath-taking highs; plenty of desperate lows; and a whole lot of nail-biting in-between. That, as you've probably rightly guessed, is how most of us feel about the stock markets, the performance of shares – and the funds that invest in them. 

To be fair, our visceral reaction is inevitable.  When the FTSE-100 index plunges, screeching headlines are quick to tell us that "billions" have been wiped from our balances.  And if the markets begin to surge when riding either a buoyant economy or burgeoning trend – such as the explosion in dot.com companies in the late 1990s – it's no wonder that our excitement mounts at dreams of untold wealth. 
 
Between all this dazzle and despair, there doesn't appear to be much room for us to think of stock markets in any other way, research suggests. According to Santander Asset Management, it appears that ordinary investors have a distinct lack of understanding of the equity markets.
 
Asked to guess which type of "asset" - shares, cash, commercial property, residential property or fixed income (bonds) - had beaten all others to become "top of the class of 2007", nine out of ten of us had no idea that the FTSE-100 index was king. The actual 'league table' for performance for 2007 is a telling read.
 
In first place stood shares, at 7.6 per cent; in second place, cash (5.65 per cent, Bank of England base rate); third, 'gilts' or government bonds (5.27%, FTSE UK Gilts All Stocks); fourth, residential property (4.8 per cent, according to Nationwide house price index); and fifth was corporate bonds with a fall of 0.41 per cent.  Perhaps unsurprisingly, most of us plumped for good old-fashioned bricks and mortar – residential property - as our best guess to where the greatest growth lay.

Why invest?

CashQuestions Guide to Investment Risk levels

CashQuestions Guide to Types of Investment

CashQuestions Guide to Tax-free Investments

CashQuestions Guide to Where to Buy

CashQuestions Guide to Online Sharedealing

---

Tag this article :