Does it make sense to invest in shares? If you have your doubts after the past few years, take a look at the table below which shows the pre-tax annual returns from a variety of different investment classes to the end of 2004.

The results are good for terms of 20 years and longer, particularly when compared to cash, but more variable for ten years and less. In the last five years, which include the stockmarket's decline from its turn of the century peak, even money under the mattress earning no interest would have beaten shares. Past performance is not an indication of future performance. The value of shares and other investments can fluctuate and it is possible you may not get back a significant proportion of your investment.

If you feel hard pressed to draw any conclusions from these statistics, do not worry. They do not show that any one type of investment has been ideal at all times in the past. What they do reveal is that it pays to diversify across investments rather than rely on one asset class.

To make the point further, according to Investment Property Databank (IPD) in March 2005, the best-performing major asset class over the last one, five and ten years is not even shown in the table — UK commercial property.

Source: Barclays Capital, February 2005