A recent publication of Australia’s investment risk and return data over the past 119 years showed 96 positive years compared with only 23 negative years. This roughly equates to 1 out of 5, with no more than two negative years in a row.
Sounds pretty good when considering a long -term investment strategy.
When I talk about the ‘long-term’, I am talking 7 plus years. However, I often have older clients who question whether they will be around in the long term to see their investment pay off.
Taking the time to customise your portfolio will benefit you greatly. You should consider what time frame best suits you and your age, what your investment goals are, and what the funds are for. Taking the time to tailor your portfolio to meet these needs will lead to good management and reliable growth.
The publication referenced above is the February 2018 publication of Credit Suisse’s Global Investment Returns Yearbook for 2018. This reference volume provides respected long-run return data and risk premium estimates for 23 international stock and bond markets.
For the 119 years analysed, the worlds average return in equity markets was 6.5%p.a., compared to Australia’s return over the same period at 6.7%p.a.
Over the last 10 years, Australia’s equity return was at 4%p.a., compared to 8.8% over the last 20 years.
Australia is currently in a low interest rate environment, and history tells us future returns from equities and bonds will tend to be lower so expectations may need to be adjusted.
Markets are variable, volatile, and unpredictable – expected returns rarely are reflective of recent historical returns. Having a long-term view is typically seen as a wise investment strategy, yet investors cannot ignore short-term numbers within their longer-term focus.
As always investing in good solid reliable companies with growing earnings, good management and a competitive advantage at the right price is the way to maximise wealth.
Having nearly 30 years’ experience as a financial advisor in the Australian market, I am well equipped to help you achieve the best return on your investments. Please contact me at firstname.lastname@example.org if you are in need of portfolio customisation.