THERE’S great Warren Buffett quote: “I buy (shares) on the assumption that they could close the market and not reopen it for five years”.
It’s good advice, evidenced by Vanguard’s 30-year index chart, released earlier this month. The chart tracks the growth over a 30-year time frame of a $10,000 investment. So had you invested $10,000 30 years ago and reinvested all income, you could now have:
$268,733 if invested in Australian shares;
$190,702 if invested in US shares;
$168,900 if invested in listed property;
$105,786 if invested in cash.
While the chart demonstrates the value of long-term investing, it also shows the value of following a broad trend rather than focusing specifically on any one fad.
What do I mean? Well the Australian shares result above is calculated on the S &P/ASX All Ordinaries Accumulation index. This index represents the 500 largest companies listed on the ASX – but over the past 30 years the top five hundred companies have changed. Some examples are the float of the Commonwealth Bank, of Woolworths, of Telstra and the various airlines.