Watch the road ahead, not the rear-view mirror
If you’re a regular reader of investment and super information, the phrase ‘past performance is not an indicator of future performance’ might sound very familiar.
But those words appear so often for a very good reason. They’re a sobering reminder for investors too keen to jump on last year’s bandwagon, because history shows us that doing so can be very risky.
The chart below shows how the main investment asset classes have fared in each calendar year since compulsory employer super was introduced in 1992.
- On four occasions an asset class has gone from best performer in one year to worst performer the next year.
- Property was the best performing asset class in 2012 and cash was the worst.
- Cash has been the top performer only once in 21 years.
- The highest return in any year was 45.4% (Australian shares in 1993).
- The lowest was -55.3% (property in 2008).
This chart also illustrates the advantages, for many people, in investing for the long term with a diversified portfolio that gives exposure across the range of asset classes.
Just give us a call on 13 11 75 or talk to your financial adviser if you’d like to learn more about investment options for your super and the benefits of having a diversified portfolio.
Sources for chart: Ibbotson Associates / Morningstar. The following indices were used: Cash – RBA Bank accepted Bills 90 Days; Aust. Fixed Interest – UBS Composite 0+ Yr TR AUD; Intl. Fixed Interest (H) – BarCap Global Aggregate TR Hldg AUD; a-REITs – S&P/A-REIT TR; Global REITs (H) – UBS Global Investors Ex AUS NR Hldg AUD; Aust. Equity – A&P/ASX200 TR; Intl. Equity – MSCI World Ex Australia NR AUD.
This information is current as at 30 June 2013 and may be subject to change. It has been prepared without taking into account a person’s objectives, financial situation or needs. For that reason, before acting on this information, a person should consider its appropriateness having regard to their own objectives, financial situation and needs. Where the information relates to the acquisition, or possible acquisition, of a particular product, a person should read and consider the relevant Product Disclosure Statement (PDS) in deciding whether to acquire, or continue to hold, the products.
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