Investors need to realise to get the average market return that investment returns do fluctuate and at times can be negative. For example if you look at the Australian share market.
The bumpy road to the market’s long-term average return
Since 1980, the Australian share market has rewarded investors with an average return of about 13%.
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- Annual market returns came within two percentage points of the market’s long-term average of 13% in just four of the past 41 years.
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- Yearly returns have ranged as high as 67% up and as low as 39% down.
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- Since 1980, annual returns have been positive 30 times and negative 11 times.
Understanding the range of potential outcomes can help you stick with a plan and ride out the inevitable ups and downs. We discuss this further in our blog The Ramdomness of Investment Returns.