For a long time, investing in Australian shareshas been the most profitable way to grow your wealth over the long term.
In fact, Australia has been the leading country in terms of investment returns since 1900. Now, none of us started investing in 1900, but investing in Australian companies and the stock market as a whole is clearly a good way to generate capital gains and dividends to use in your retirement or other financial goals.
Most of us like to invest close to home. It is often a comfort to know that your money is not too far away in places that you may not understand.
As you can see, most investors favour a home bias.
Don’t Sweat The Small Stuff
Stock markets can be volatile and investing in Australia is no different. However, as you can see below the Australian market delivers a positive return most years with only 4 years being a time to really grit your teeth. But if you understand how to invest regularly and rebalance periodically, you will most likely see the market deliver a positive return of your investing life.
Most folks get frightened by volatility because sometime the stock market can move higher or lower very quickly. But again look below and you can see that while the market has a bad patch nearly every year, it never stays low or high on a permanent basis. So while volatility can scare investors, there are very few years where your portfolio really suffers like 2008. But look at 2009. If you had continued to invest while the market dropped in 2008, you would have been rewarded handsomely the next year. So these are reasons to keep at it and take a long term view when it comes to investing in Australian shares.
While investing in Australia has been a consistent way to generate wealth, be sure to think about other markets as well. Diversification can play an important part in your investment success. For example, since 2009, investing in Australia has not been as fruitful as has investing in other countries such as the USA so diversifying into other markets can help increase your returns. Spreading your investment dollars is a good way to generate solid investment returns so be sure to consider taking a global approach. Understanding the stock market is not hard and many people, like me, manage their own investments either directly by buying and selling shares or via their SMSF.
If you would like to know more, contact me at www.stockmarketmentor.com.au