£4,395 on the statement. £526 in the real world.
The gap between those two numbers is what 7.3% annual inflation does over 30 years. British investors from the swinging sixties to the poll tax era watched their portfolios grow impressively on paper — while the pound quietly lost most of its value.
What the headlines said
UK equities delivered 43x nominal returns over this period. £100 became £4,395. On a statement, that looks like extraordinary wealth creation.
What actually happened
The 1960s optimism gave way to oil crises, three-day working weeks, the Winter of Discontent, and inflation that topped 25% in a single year during the 1970s. Prices never stopped climbing.
By 1990, £4,395 bought what £526 would have bought in 1960. The nominal return was an illusion — 88% of the gain existed only on paper.
The takeaway: Nominal returns can be deeply misleading. A 43x gain was really a 5x gain. Always measure wealth in what your money can actually buy.
Explore this period in Bellavia's historical backtester.
