What is the average return of the FTSE 100?

Around 7.5% a year with dividends reinvested since its 1984 launch or about 5.5% on index price alone.

Why does my FTSE tracker show different returns from the index on the news?

The news quotes the price index. Your fund earns dividends on top and after small fees should closely match the total return version.

What would £10,000 in the FTSE 100 be worth after 10 years?

At historical average 10 year total return of roughly 8% a year, about £21,600. Actual decades have ranged from roughly flat to far higher.

Is the FTSE 100 a good measure of the UK economy?

Not really. Its giants earn most revenue overseas, so it responds to global conditions and pound. The FTSE 250 reflects the domestic economy more closely.

FTSE 100 or S&P 500, which returns more?

The S&P 500 has returned more over recent decades at around 10% annualised, but the FTSE offers higher dividend income and different sector exposure and past leadership rotates.

Do dividends really matter that much?

They are roughly half of the FTSE 100's long run return. Over 20 year stretches, dividend reinvestment has been the difference between a flat outcome and a doubled one.

Specialist Calculator

FTSE Index Return Calculator UK

Name: FTSE Index Return Calculator UK
Author: CalZone

Work out what an investment tracking FTSE would have returned or project one forward. Enter an amount, a timeframe and whether dividends are reinvested and calculator shows outcome using historical FTSE return rates. Past performance is not a guide to future returns.

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UK Index performance report

FTSE Returns: The Numbers That Matter

The FTSE 100 has two very different return histories depending on one choice, whether dividends are counted.

Measure	Annualised since 1984 launch	Price return (index level only)	Around 5.5%	Total return (dividends reinvested)	Around 7.5 to 7.8%
That 2 percentage point gap compounds into a chasm. From 1984 to 2019 the index rose 654% in price but 1,377% in total return terms. The FTSE 100 currently yields around 3.5 to 4% in dividends, which is roughly half of long run total return, a far bigger dividend share than most global indices.

The Lost Decades That Weren't

Headline index level badly misleads. FTSE 100 closed 1999 at a then record 6,930 and twenty years later had crawled barely 600 points higher, a price return of almost nothing. Yet £1,000 invested at that worst possible moment, with dividends reinvested, more than doubled to £2,222 over the same period. Another worked example, £10,000 tracking the index from end of 2012 grew to about £12,600 on price alone by end of 2022 but £18,500 with dividends reinvested.

This is why any FTSE return calculation and any comparison against other indices, must use total return figures. The number quoted on the news each evening is only the price index.

What Range of Returns to Expect

The averages hide a rough ride. Single calendar years since 1984 have ranged from +35% (1989) to −31% (2008), and worst peak to trough fall exceeded 52% in early 2000s bear market. Stretch holding period and range tightens dramatically, across all possible 10 year holding periods since launch, average annual total return was around 8.4%, with even worst 10 year window scraping a small positive total return. Starting point matters enormously though, since buying at 1999 peak versus 2009 trough produced wildly different decade outcomes, which is practical argument for drip feeding in rather than committing everything at one moment.

FTSE 100 vs FTSE 250 vs All Share

FTSE 100 covers largest 100 UK listed companies, dominated by global earners in energy, banking, mining and pharmaceuticals, so it tracks the world economy more than UK high street. The FTSE 250, next 250 companies, is more domestically focused and has historically delivered higher long run returns with bigger swings. FTSE All Share combines them with smaller companies for broadest UK market measure. For context, the S&P 500 has annualised around 10% over recent decades, ahead of the FTSE 100, though with heavier concentration in US technology.

How to Actually Invest in FTSE Returns

You cannot buy an index directly. Index funds and ETFs track it for ongoing charges as low as 0.05 to 0.2% a year and choosing accumulation units (or automatic dividend reinvestment) captures total return this page describes. Held inside a stocks and shares ISA, dividends and growth are entirely tax free. The one behaviour that has reliably destroyed FTSE returns historically is selling during the crashes that punctuate every decade of the data above.