#20 Investing in good quality companies on the Australian stockmarket will remain a sensible strategy for the patient investor looking to build long-term wealth

By Anton Tagliaferro, Ben van den Tol |  26 March 2019
outlook

Investing in the Australian stockmarket exposes investors directly to the endeavours of Australian company management and the growth of the Australian economy, with an expanding economy generally leading to rising corporate profits.

The Australian economy has grown steadily over the last 20 years and unlike many economies overseas has avoided any recessionary period. In fact, Australia hasn’t had an official recession since the severe downturn of 1991 – a period when unemployment jumped to over 11%.

The generally good health of the Australian economy and low interest rates over the last two decades has helped underpin returns from the Australian sharemarket, which despite its ups and downs - as evidenced during the correction of 2001 and the global downturn of 2008 - has returned investors almost +9% per annum compounded, as measured by the ASX 300 Accumulation Index over this period.

This return compares very favourably to the returns of other markets over the same period:

Index

Total return 20yrs p.a. to 30 June 2018

MSCI World

+5.5%

S&P 500

+6.5%

Euro Stoxx 50

+2.6%

Nikkei 225

+6.4%

FTSE 100

+4.9%

ASX300

+8.9%

Source: Factset; 1 July 1998-30 June 2018

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