Take some Risk, Get some Return
Saving your money is fine, but if you’re ambitious and really want to try to catapult your wealth, the most common strategy is to invest your money into financial markets.
Since 1926, different markets have returned different results on an annual basis. Some of the most common markets you’ll recognise are:
Cash – 5.5%
Fixed Interest – 6.9%
Australian Property – 11.0%
Australian Shares – 11.3%
Some of the above holdings are riskier than others. By risky, we mean they’re more volatile. While the Australian Share market might not return 11.30% each year, over a longer period the return starts to iron out. Think of it like climbing a mountain, there are sections that go up, there a sections where you go down, but the longer you walk up the mountain, the higher you get from the ground.
What this means, is that if you’re willing to wait to cash out you’re earnings, history tells us that your investment should go up in value!
Put simply, what could we estimate that $100 put into the above markets in 1926 would be today:
Cash – $6,400
Fixed Interest – $25,600
Australian Property – $1,500,000
Australian Shares – $1,638,400
But that seems like a long time! If we use the above long-term returns to explore how $10,000 a year invested would mean after 20 years, the results are quite astounding!
Cash – $284,812
Fixed Interest – $326,742
Australian Property – $493,959
Australian Shares – $509,408
Different investment classes suit different people. So when figuring out where you want to invest, it’s advisable to look at how long you want to invest for, if you need the money in a short time period and overall, how do you feel about your money going up and down like a yo-yo!
It’s a tricky investment world out there, so pleased consult a professional if you’re thinking about dipping your toes into an unknown investment market.