Let’s have some Fun.
Say you invested $1 into the Australian share market in 1900. Yes! Over 121 years ago, what would you expect it to be worth today?
$117, $117,000, 217,000 No…
A whopping $3,276,556. Amazing.
Now the numbers. To obtain that, sum you needed to invest $1 (yes, a dollar) at an annual rate of return of 13.20% (ignoring fees and taxes) but excluding franking credits. In isolation 13.20% does not appear to shoot the lights out when compared to the crazy returns people are “apparently” obtaining within crypto currencies, and a raft of other speculative “investments”, but the moral of the story is, slow and steady truly does win the race.
As Financial Planners we constantly hear the misguided statement ‘shares are risky’. The fact is, under the right guidance they aren’t! If you take a short-term view to a long-term asset and feed off media hysteria your investment path and returns are guaranteed to appear risky.
Holding Australian shares in aggregate is an extremely effective way of tapping into the most productive enterprise available on this continent. As Vanguard’s late founder Jack Bogle sums it up ‘stand there and do nothing.’ Although 121 years is a long time to stand there, but you get the idea.
Anyone over 45 might be reading this and be thinking mate, I don’t have 121 years, I might be lucky for 40 or 50 more. The good news is Australian Shares can still play a key part in your investment life, the true tortoise in the race is the consistent and growing dividend income stream available from Australian shares, too many retirees or pre-retirees trade productive Australian shares for poor performing Term Deposits, leaving them with a truly risky investment.
And for those who are curious as to how much one Australian dollar 121 years ago is worth today (i.e. adjusted for inflation), it is roughly equivalent to $311.
If you’d like more information on how you can fit Shares into your financial planning strategy start a conversation with us today.
You need to consider with your financial planner (or adviser), your objectives, financial situation and your particular needs prior to making an investment decision. Sensibly Pty Ltd and its authorised representatives (or credit representatives) do not accept liability for any errors or omissions of information supplied on this website
Nick Shanley, Steve May, Luke Styles and Shanley Financial Planning T/A Steve May Financial Services are Authorised Representatives / Corporate Authorised Representative of Sensibly Pty Ltd, AFSL 533923. Please refer to our website at www.stevemayfs.com.au to reference our Financial Services Guides.
