Sent: 16-12-2009 10:04:02
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Investment Return Graphs
Whilst everyone is focused on the Cooper and Henry Reviews it's important to stay focused on the main game with superannuation - generating wealth.
There are lots of ways that people do this and it's not my place to tell anyone how best they should invest their money.
Nevertheless I thought you might be interested in the following three graphs which I keep up to date.
[Before I present the data, I need to make clear that I'm not advocating one investment over another. You're continued reading of this article assumes that you accept and agree with this statement.]
No expenses are assumed in these graphs.
The first graph shows what happens when $100,000 is invested in March 1982 into either rolling 12 month term deposits or the ASX 200 broad market.
Four pieces of data are supplied. The capital value of each investment (these are the lines) and the income from each investment (these are the bars). The data takes up to the end of October 2009. In the next few days we'll be able to see what the data is like for the end of November '09.
There are a lot of points one can make about these graphs. Firstly the low level of income in term deposits. Secondly the much higher level of income out of the broad sharemarket. We can also see several market booms and busts. The most recent one being the obvious.
The next graph shows the level of dividend income paid from shares since March 1982. This graph however is based on December year ends. (The 2009 data is incomplete and only up to the end of October 2009. It seems likely that the level of return for 2009 will be lower than previous years but not as dramatically lower as assumed in this graph.)
One can clearly see that shares pay a reasonable return in income. Three tax rates are shown (0%, 15% and 46.5%) and alls assume that 75% of the dividends received are franked.
Often that level of income is above the required minimum for pensions.
The final graph begins in March 1986 with $255,378 and compares the ASX 200 data with rolling 12 month term deposits and also the ABS weighted average house price and rental data.
March 1986 is used because that is the date when the ABS began releasing house price and rental data.
Obviously this housing data is for the Australian market as a whole. Housing market returns fluctuate from street to street, suburb to suburb, town to town, city to city and state to state.
Once again the data is incomplete and up to the end of October 2009.
This ABS housing data is released every quarter.
I have other graphs that you might find interesting which I will make available periodically during 2010.
Finally please consider purchasing a copy of my book. You can look at the contents page at the following link: http://www.atcbiz.com.au/r.php?r=0mjd6ne
Two options are available - once only subscription - $55 inc GST - or an annual subscription will gives you access to all the updates made throughout the year ($120 inc GST).
The book can be purchased at the following link: http://www.atcbiz.com.au/r.php?r=5a4agqb
This email is general in nature only and does not constitute or convey specific or professional advice. Legislation changes may occur quickly. Formal advice should be sought before acting in any of the areas discussed. Be aware that the information in these articles may become innaccurate with time. Responsibility is disclaimed for any inaccuracies, errors or omissions. Particular investments are neither invited nor recommended and hence this publication is not "financial product advice" as defined in Section 766B of the above legislation. All expressions of opinion by contributors are published on the basis that they are not to be regarded as expressing the official opinion of any other person or entity unless expressly stated. No responsibility for the accuracy of the opinions or information contained in the contributor's articles is accepted by any other person or entity. Copyright: This publication is copyright. If you wish to reproduce this article you require a license, which can be purchased here, to do so.