CBC Presents: Cash versus Shares over the Long Term
In what has been a tumultuous period for investment markets, a cash buffer may have served you well, however if you refer to the graph below you will see the long term returns of cash through different markets:
$100,000 invested in Term Deposits and Australian Industrial Shares since 1982
From an income perspective the purple bars above represent the increasing dividends on $100,000 invested in Australian Industrial shares over the long-term. The blue bars show a comparison of the interest received over the years from a Term Deposit investment. On the left hand scale you will note the great variance over time in the amount of income produced by Term Deposits compared with Australian shares and that Term Deposits fall a long way behind as the years progress.
From a capital value perspective on the right hand scale, the green line shows the value of a $100,000 share investment growing over the years where the red line demonstrates that Term Deposits do not increase in value. It should be noted that this is before the eroding effect that inflation has on the real value of the investment.
In summary the graph demonstrates that historically cash over the long term is not an investment that delivers the returns Australian shares can potentially provide, from both a growth and income perspective, even though cash can offer short term relief from the volatility of the sharemarket.
Whilst it is not suitable for everyone to have their investments wholly in shares, having your entire investment in cash will leave you a long way behind in the long term. In light of the current market conditions we would like to discuss how we may be able to assist you in the review of your portfolio or any other needs you may have.
Please do not make an investment decision based on information in this email. To ensure that your investment strategy remains appropriate, please contact us on 1800 622 892 or email cbc@cbc.com.au to further discuss your situation.
