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27 minutes ago
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£5,000 invested in the stock market 5 years ago is now worth…
The last five years have been pretty fantastic for the UK stock market. Following the chaos of the pandemic, British shares have largely bounced back nicely, with some reaching impressive new highs. Of course, not every stock's been a winner. Yet when looking at the total return of the FTSE 100 as a whole, the UK's flagship index has vastly outperformed historical norms, reaching new record highs earlier this year. So how much money have investors made since August 2020? Crunching the numbers Let's start with passive index investors. Over the long term, the FTSE 100 has generated an average annualised gain of around 8%. But since 2020, with the market still reeling from the impact of the pandemic, that return's jumped to 12.9%. That's ahead of even the S&P 500's usual annual gains. And anyone who invested £5,000 at this rate five years ago is now sitting pretty on around £9,500. This is yet another demonstration of the power of investing during a stock market crash or correction. While it can be a volatile experience, buying when everyone else is panic-selling is a proven strategy for building wealth. But even these impressive gains pale in comparison to what some individual stock pickers have enjoyed over the same period. And few stocks demonstrate this as well as Rolls-Royce (LSE:RR.) has. Investing in turnarounds Under new leadership, the aerospace & defence engineering giant has gone from the brink of bankruptcy to new record highs, delivering a staggering 1,124% return in the last five years. That's the equivalent of a 65% annualised return, enough to transform a £5,000 investment into £61,200! Needless to say, anyone who saw the potential and bought shares is likely patting themselves on the back right now. Today, the business continues to show promise. The air travel market has now recovered beyond pre-pandemic levels, driving up demand for the group's higher-margin aftermarket maintenance services. And with geopolitical tensions heating up, the company is finding new growth opportunities for its defence-focused business. Both are pushing free cash flows higher, giving management the flexibility to continue mending the cracks in the balance sheet and tackle its outstanding debts. Of course, there are still some notable threats to consider. While geopolitical tensions are a tailwind for its defence segment, that's not the case for its core civil aerospace arm, which continues to drive the bulk of cash flows. Higher oil prices drive up fuel costs. And airliners have historically responded by cutting back the number of available flights, handicapping demand for the firm's engines and services. And with the stock now trading at a premium valuation, any unexpected slowdown could trigger significant volatility. That's something investors will have to consider carefully before putting any money to work in 2025. The bottom line Not every stock has been an outperformer like Rolls-Royce. And there are plenty of examples where growth expectations failed to materialise, resulting in disappointing losses. For example, Ocado's down over 80% over the same period. As for Rolls-Royce, with most of its future growth already baked into its share price, this isn't a business I'm rushing to buy today. Instead, I'm focused on finding other turnaround opportunities within the stock market that are still under the radar of most investors. The post £5,000 invested in the stock market 5 years ago is now worth… appeared first on The Motley Fool UK. More reading 5 Stocks For Trying To Build Wealth After 50 One Top Growth Stock from the Motley Fool Zaven Boyrazian has no position in any of the shares mentioned. The Motley Fool UK has recommended Rolls-Royce Plc. 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. Motley Fool UK 2025 Sign in to access your portfolio
Yahoo
27 minutes ago
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In 5 years, £20,000 invested in a Stocks and Shares ISA could be worth…
Investing in a Stocks and Shares ISA is a fantastic way to build wealth tax-free. But let's say an investor has maxed out their annual allowance and put £20,000 in their ISA. How much money could they realistically make in the next five years? 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. Projecting earnings Theoretically, there is no limit on how much money an investor can make in the stock market. A successful investment in a tiny penny stock could yield transformative gains that might even push someone into millionaire territory. Sadly, penny stocks are exceptionally risky bets that nine times out of ten end up failing miserably. In fact, there's a good chance wealth will be destroyed rather than created. So, expecting such an explosive return will likely leave investors disappointed. However, there are plenty of other non-penny stock opportunities to explore. And for those wanting to take the index fund investing approach, the FTSE 100 has historically offered an annualised return of around 8% per year. Assuming this pattern continues between now and 2030, a £20,000 ISA investment could grow to £29,800 with no additional capital. Yet for the investors willing to get their hands dirty with stock picking, the gains could be far more impressive while still staying in the land of large- and mid-cap stocks. Unlocking impressive returns Let's look at the engineering group, Senior (LSE:SNR), as an example to consider. As a quick crash course, the business designs and produces critical components for original equipment manufacturers operating primarily within the aerospace & defence sector. And in the last five years, it's proven to be a tremendous performer, climbing by almost 270% before counting dividends. That's the equivalent of a 29.9% annualised return, transforming an initial £20,000 investment into a whopping £87,570! These market-beating returns were driven by a variety of factors largely revolving around operational improvement. Since 2020, the company has secured a series of new contract wins that boosted its order book, pushing both revenues and profits higher while simultaneously streamlining operations and bolstering margins. Today, there's still a strong bull case for investors: The streamlining continues with management aiming to dispose of its loss-making aerostructures segment. Its core civil aerospace income continues to rise as build rates by Boeing and Airbus climb higher. And the fleet modernisation cycle, where airliners are replacing their planes with more fuel-efficient aircraft, is accelerating, driving more demand. Taking a step back There's a lot to like about this business. But it still has its weak spots. Even with restructuring progress, profit margins are still pretty thin relative to its competitors. And even with good execution, there's no guarantee it can catch up to its more nimble rivals. This is particularly problematic given the large amount of outstanding debt on the balance sheet and currently thin coverage of interest payments. With that in mind, should its cyclical cash flows suffer an unexpected slowdown, its recent share price gains could struggle to keep up with its recent track record. And in the worst-case scenario, they could actually reverse. I still see growth potential here for a Stocks and Shares ISA. So, investors may want to consider taking a closer look, but it's essential to weigh both the risk and potential rewards. The post In 5 years, £20,000 invested in a Stocks and Shares ISA could be worth… appeared first on The Motley Fool UK. More reading 5 Stocks For Trying To Build Wealth After 50 One Top Growth Stock from the Motley Fool Zaven Boyrazian has no position in any of the shares mentioned. The Motley Fool UK has recommended Senior Plc. 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. Motley Fool UK 2025 Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
35 minutes ago
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Public consultation begins into parking charges at three 'destination' Birmingham parks
The formal consultation into the city council's plans to charge motorists to park at three 'destination' Birmingham parks has begun. Birmingham City Council is now asking for the public's feedback on its proposals to introduce charges for drivers to park at Sutton Park in Sutton Coldfield, Lickey Hills Country park on the Birmingham Worcestershire border and at Sheldon Country Park, which is close to Birmingham Airport and is popular with plane spotters. The consultation will run from Friday, August 1 to Friday, August 29, across the summer school holiday period. Read more: Anger as Brum Council pushes ahead with 'unjust' park charges The city council says 'introducing charges at these parks will be bring Birmingham in line with similar places around the UK to offset the cost of maintaining these destination sites'. It says the charges are 'necessary' to 'help sustain, protect and maintain our 660 parks and green spaces'. The Sutton Park consultation plans to charge motorists who park after the first 30 minutes of any stay. The charges for most vehicles will be £1 from 30 minutes to an hour, £2 for one to two hours, £3 for two to three hours, £4 for three to four hours and £5 for for four to nine hours. Charges would apply from 9am until 6pm daily, every day of the year. Read more: 'Shocking' Park car parking charges plan slammed as MP says it'll cause 'misery' For buses the charges are £28 after 30 minutes and for up to nine hours. A season ticket will also be offered at £52 a year for the public, £39 to business applicants and free for volunteers. The charges will not include the Browns and Miller and Carter restaurant car parks, the Paddock car park near Town Gate and Midland Lodge which was put up for sale earlier this year. The Lickey Hills Country Park consultation says the proposed charges are £1 an hour for up to four hours, £5 for all day and £28 for coach parking at Beacon Hill only. The charges will apply 365 days a year from 9am to 6pm. There will also be a £52 season ticket offer. Blue badge holders can park for free. The Sheldon Country Park consultation proposes charges that will be slightly cheaper. Again the first 30 minutes is free, then the proposal is to charge 75p for 30 minute to an hour, £1.50 for one to two hours, £2.25 for two to three hours and £3.50 for upwards of three hours for the rest of the day. Charges are again proposed from 9am to 6pm every day. And a season ticket at £52 will also be offered, or £39 for businesses and free for volunteers. The formal consultations (all linked above) follow informal consultations, which took place at the end of last year. Get the latest BirminghamLive news direct to your inbox Cllr Majid Mahmood, cabinet member for environment and transport, said: 'We have some wonderful parks and green spaces across the city. 'But we need to be able to maintain them for the benefit of everyone. Introducing parking charges at these three major sites will help protect and maintain all our green spaces. 'Whether you use these parks for walking, cycling, exercising or meeting up with people, we want to hear your views on rate of charging and when we you should be charged. 'We are also aware of potential impact of displacement parking and will therefore be looking at traffic restrictions in existing hotspot areas and any need for further restrictions following residents' feedback.'
