You know how Murphy continually tells us that the stock market really doesn\’t do it? That everyone should be investing in bonds, not shares?
The pulling power of dividends is constantly highlighted by Barclays in its Equity Gilt Study published every spring. Its latest survey showed that £100 invested in shares in 1899 would today be worth £22,239 in real terms with dividends reinvested, compared with just £160 without.
Now that\’s an extreme number of course. But it does show the mind gargling stupidity of Murph\’s caclulations. For, as you will recall, he looked at stock market returns excluding dividends.
Currently, the risk free long term return on bonds is negative. That on shares (which are of course not risk free) is positive.
Murhp says that to save for your retirement you should be buying bonds. Indeed, the government should force you to.