Over 10 years, the S&P/ASX 200 Index has an average total return of 9.3 per cent each year. [3] The total return combines the price return (capital growth) and income return (yield). Almost half the total return came from yield. That shows the importance of dividends.
The Australian stock market has delivered an average annual return of around 13% since 1980. But short-term results may vary, and in any given period stock returns can be positive, negative, or flat. When setting expectations, it's helpful to see the range of outcomes experienced by investors historically.
122 Years of Historical Returns
Since 1900, the Australian sharemarket has returned an average of 13.2% per annum.
What returns has the S&P/ASX 200 earned? The Australian share market index has enjoyed strong returns of around 8.1% p.a. over 20 years even with some bumps along the way including the Global Financial Crisis (GFC).
The ASX 200 provides a great starting point for beginners who want to invest in stocks because it offers exposure to some of Australia's most successful businesses but also has enough diversity that long-term investors don't feel like they're too exposed to just one sector or industry.
Over the previous thirty years, it was 9.05%. Since the bottom of the market in March in 2009, it was 10.44%. The highest twelve-month return was 86.1% (12 months to end July 1987). The lowest twelve-month return was minus 41.7% (12 months to end November 2008).
Historically, the Australia Stock Market Index (AU200) reached an all time high of 7632.80 in August of 2021. Australia Stock Market Index (AU200) - data, forecasts, historical chart - was last updated on July of 2023.
S&P 500 10 Year Return is at 177.1%, compared to 156.3% last month and 177.9% last year. This is higher than the long term average of 112.9%.
The worst 10 year annual return was a loss of almost 5% per year ending in the summer of 1939. That was bad enough for a 10 year total return of -40%.
Over the last twenty years, the top-performing United States stocks are Monster Beverage, Apple, Nvidia, Booking Holdings, and Equinix.
The Australia Stock Market Index (AU200) is expected to trade at 7150.80 points by the end of this quarter, according to Trading Economics global macro models and analysts expectations. Looking forward, we estimate it to trade at 6682.71 in 12 months time.
Vanguard's ASX 300 ETF is inherently more diversified than an ASX 200 ETF, simply by virtue of its inclusion of ASX shares in its portfolio. Investors in an ASX 200 ETF will find they have large weightings toward our biggest banks and miners.
Many ASX listed companies pay dividends twice each year, usually as an 'interim' dividend and a 'final' dividend. Companies are not limited to paying twice a year and may pay more or less frequently.
A 20% return is possible, but it's a pretty significant return, so you either need to take risks on volatile investments or spend more time invested in safer investments.
Assuming long-term market returns stay more or less the same, the Rule of 72 tells us that you should be able to double your money every 7.2 years. So, after 7.2 years have passed, you'll have $200,000; after 14.4 years, $400,000; after 21.6 years, $800,000; and after 28.8 years, $1.6 million.
The term “Lost Decade for Stocks” refers to the ten-year period from 12/31/1999 through 12/31/2009, when the S&P 500® generated an annualized total return of -0.9% over the period.
Most investors would view an average annual rate of return of 10% or more as a good ROI for long-term investments in the stock market. However, keep in mind that this is an average.
How To Use the Rule of 72 To Estimate Returns. Let's say you have an investment balance of $100,000, and you want to know how long it will take to get it to $200,000 without adding any more funds. With an estimated annual return of 7%, you'd divide 72 by 7 to see that your investment will double every 10.29 years.
To help put this inflation into perspective, if we had invested $8,000 in the S&P 500 index in 1980, our investment would be nominally worth approximately $951,129.45 in 2023. This is a return on investment of 11,789.12%, with an absolute return of $943,129.45 on top of the original $8,000.