Markets reward long term investors

The financial markets have a long history of rewarding long term investors. The charts below show the performance of a typical client in a Balanced 70% Growth/30% Defensive portfolio. We then put that short-term performance in perspective by showing it in the context of the longer-term performance of this same portfolio.

12-month performance of a Balanced investor (to end of March 2020)

The chart below shows that $1 invested 12 months ago in a Balanced strategy would now be worth approximately $0.94. The same investment in cash would be worth approximately $1.015, outperforming the Balanced investor.

Source: Dimensional Fund Advisors

5-year performance of a Balanced investor (to end March 2020)

The chart below shows that $1 invested 5 years ago in a Balanced strategy would now still be worth approximately $1.20 despite the recent heavy market corrections in early 2020. This is twice the return from the same investment in cash which would be worth approximately $1.10.

Source: Dimensional Fund Advisors

15-year performance of a Balanced investor (to end of March 2020)

The chart below shows that $1 invested 15 years ago in a Balanced strategy would now be worth approximately $2.60. This time period includes the Global Financial Crisis as well as the recent heavy market correction in early 2020. The same investment in cash would be worth approximately $1.75.

 Source: Dimensional Fund Advisors

As you can see diversified portfolios with defined exposures to shares, bonds and property have provided growth of wealth that has more than offset inflation and cash returns.

It pays to take a longer-term perspective and not get pulled off track by the distractions of right now.

Next steps

To find out more about how any of these measures may be of assistance in your individual circumstances, please contact Gordon Thoms or David Conte at Calibre Private Wealth Advisers on ph. (03) 9824 2777 or email us here.

This advice may not be suitable to you because it contains general advice that has not been tailored to your personal circumstances. Please seek personal financial and tax/or legal advice prior to acting on this information. Before acquiring a financial product a person should obtain a Product Disclosure Statement (PDS) relating to that product and consider the contents of the PDS before making a decision about whether to acquire the product. The material contained in this document is based on information received in good faith from sources within the market, and on our understanding of legislation and Government press releases at the date of publication, which are believed to be reliable and accurate. Opinions constitute our judgment at the time of issue and are subject to change. Neither, the Licensee or any of the Oreana Group of companies, nor their employees or directors give any warranty of accuracy, nor accept any responsibility for errors or omissions in this document. Gordon Thoms and David Conte of Calibre Private Wealth Advisers are Authorised Representatives of Oreana Financial Services Limited ABN 91 607 515 122, an Australian Financial Services Licensee, Registered office at Level 7, 484 St Kilda Road, Melbourne, VIC 3004. This site is designed for Australian residents only. Nothing on this website is an offer or a solicitation of an offer to acquire any products or services, by any person or entity outside of Australia.

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