Historical Average Returns on the ASX
Investing in the stock market can be both exciting and nerve-wracking. Over the past three decades, Australian shares have weathered various storms, from stock market crashes to global pandemics. But how have they performed in the long run? Let’s dive into the numbers.
The Vanguard Index Chart
For the past twenty years, Vanguard Australia has produced an index chart tracking the 30-year performance of major asset class indices. The 2022 chart reveals some interesting insights:
Australian Shares
Despite market volatility, Australian shares have performed remarkably well. An investment of $10,000 in 1992 would have grown to an impressive $131,413 by 2022, with an average annual return of 9.8%.
US Shares
US shares outperformed Australian shares slightly, with an average annual return of 11.7% over the same period.
Australian Listed Property
Listed property investments also fared well, returning an average of 9.3% per annum.
International Shares
International shares closely followed Australian listed property, with an average annual return of 9.1%.
Australian Bonds
Bonds and cash are considered low-risk assets. Over 30 years, Australian bonds delivered steady gains at an average annual return of 6%.
Cash
Cash investments grew at a more conservative pace, with an average annual return of 4.4%.
Volatility and Steady Gains
The full track record for these asset classes over three decades highlights market volatility and how fortunes can quickly turn around. While shares can experience dramatic ups and downs, bonds and cash provide more stable returns.
Long-Term Context
Historically, the Australian stock market has delivered an average annual return of about 13%. This figure underscores the resilience of Australian shares as an asset class.
Remember that these returns assume no transaction costs or taxes and include reinvestment of all income. Your actual returns may vary based on individual circumstances and investment choices.
So whether you’re a seasoned investor or just starting out, understanding historical averages can help you make informed decisions for your portfolio.
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Please note that past performance is not indicative of future results, and it’s essential to consider your risk tolerance and investment goals when making financial decisions.
Data from Vanguard Australia’s index chart.
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