InvestSMART's Performance for the December Quarter
International Equities Portfolio
Property and Infrastructure Portfolio
2022 has shown to be a textbook example of why you should invest for the long term.
Three significant downturns in 2022 of either 8% or more caught most people's attention. What was hidden from view was the ASX also had three significant upturns, meaning it almost finished the year in the black. As a result, the ASX ended up down just 1.08% over the year.
If we expand to three years, the ASX, on a total returns basis, has given investors 19.9%. Finally, if we move out to a more realistic investment timeframe of five years, the ASX has returned 43.1% to investors like you.
And this is why we talk in years and in total returns in the investing game.
Thus 2022 is a year to remember for the following two reasons. First, one year does not make an investment, and second, investing for the long term with a diverse range of holdings will make riding out a year like 2022 that bit easier.
Frequently Asked Questions about this Article…
Investing for the long term is crucial because it allows you to ride out market volatility, like the significant downturns seen in 2022. Over time, markets tend to recover and grow, as evidenced by the ASX's 43.1% return over five years.
In 2022, the ASX experienced three significant downturns of 8% or more, but it also had three significant upturns. By the end of the year, the ASX was down just 1.08%, demonstrating the importance of a long-term investment perspective.
A diverse investment portfolio helps mitigate risk by spreading investments across different asset classes. This diversity can make it easier to endure challenging years, like 2022, and benefit from market recoveries and growth over time.
The article mentions several types of investment portfolios, including Conservative, Balanced, Growth, High Growth, Ethical Growth, Interest Income, International Equities, Property and Infrastructure, and Hybrid Portfolios.
Over a three-year period, the ASX provided a total return of 19.9% to investors, highlighting the potential benefits of maintaining investments over a longer timeframe.
Total returns are significant because they provide a comprehensive view of an investment's performance, including both capital gains and income. This perspective is essential for understanding the true value of an investment over time.
Focusing solely on one-year performance can be misleading, as it doesn't capture the full picture of an investment's potential. Long-term investing allows you to benefit from market recoveries and growth, as seen with the ASX's performance over five years.
The market fluctuations in 2022 teach investors that short-term volatility is a normal part of investing. By maintaining a long-term perspective and a diverse portfolio, investors can better navigate these fluctuations and achieve their financial goals.
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