What do you have to do to turn a $1 into $2,301,706
With the latest market statistics available, I thought I would cheat again and repeat an earlier blog from 2017. Say you invested $1 into the Australian Share Market 119 years ago what would it be worth today?
A whopping $2,301,706!
Now the numbers. To obtain that sum you needed to invest $1 (yes, a dollar) at an annual rate of return of 13.10% (ignoring fees and taxes) but excluding franking credits. In isolation 13.10% doesn’t appear to shoot the lights out when compared to some of the proclaimed ‘pub talk’ returns, but none less it’s commendable.
As a Financial Planner I consistently hear the misguided statement ‘shares are risky’. The fact is, under the right guidance they aren’t! If you make the mistake of applying a short-term filter to a long-term asset class and feed off the 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 summed it up ‘stand there and do nothing.’ Although 119 years is a long time to stand there, but you get the idea.
Anyone over 50 might be thinking I don’t have 119 years; I might be lucky for 40 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 119 years ago was worth today (accounting for inflation), it’s circa $80.
Given the majority of working Australians have some form of retirement savings plan through superannuation, the exclusion of solid ‘buy and hold’ share investments due to the media or a local punter saying how ‘risky’ they are is ludicrous and misguided.
I have included one of my favourite illustrations in the link below, it really puts the Doomsayers right back into their box.
ALWAYS REMEMBER; THE BEST TIME TO START INVESTING WAS YESTERDAY AND THE SECOND BEST TIME, TODAY!
To discuss how shares can form part of you investments, give the team at Steve May Financial Services a call and start a conversation today.
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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.
