109 years of Australian sharemarket returns

by Andrew Newman
in Investing
2 Sep 2009 | 2 Comments

The Australian sharemarket recorded the worst year on record in 2008 when the All Ordinaries Index fell 43%. While it is difficult to dismiss short term losses, we need to remember that wealth is built over the longer term. Since 1900, the Australian sharemarket posted positive returns in 81% of calendar years as shown in the chart below. Also, the most common return is between 10% and 20%.

All Ordinaries Index annual returns from 1900 to 2008

During the 109 years from 1900 to 2008, the Australian sharemarket has produced an average annual return of 13.3% including dividends as shown in the chart below. For example, if you invested $1,000 in 1900, at the end of 2008 you would have approximately $211,000,000 (not including fees and taxes). This shows a long term approach to investing in the sharemarket remains an attractive proposition.

All Ordinaries Index yearly returns from 1900 to 2008

The charts above show the annual calendar year returns for the All Ordinaries Index from 1900 to 1979 and the S&P/ASX All Ordinaries Accumulation Index from 1980 to 2008 by percentage performance.

The above charts have been sourced from AXA Australia.

Important Information

The information provided is general in nature and does not constitute financial advice. While we have taken reasonable care in providing this information, it should not be construed as being specific to your investment objectives, financial situation or particular needs. It's important for you to consider these matters before making any financial decision and we recommend you seek financial advice.

Comments (2)

Thanks Jim.

It's amazing how compound interest works.

Another example: suppose someone had the good sense to invest US$10,000 in one of Warren Buffett's original partnerships back in 1956 when they first started. And suppose that when the partnerships terminated in 1969, this person reinvested the proceeds in Berkshire Hathaway. Today that person would be worth over US$280 million-after all taxes and expenses.

Click on the link below for more information about Warren Buffet (scroll to the end of the page)

2 Sep 2009, Andrew Newman, http://www.cmpfinancialplanning.com.au/investing

Andrew

The bell chart offers an excellent visual to put 2008 into perspective.

(Pity my grandfather forgot to invest say $10 for me in 1900. I'd be a multi-millionaire today)

2 Sep 2009, jim noonan, www.jimnoonan.id.au

109 years of Australian sharemarket returns

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