Best returns on investment 2014
Here’s a question everyone would love to answer in advance. If only we had a crystal ball? I’ve looked back at the last year to see where your investments would have done best and it’s a great motivator to diversify your investments. By diversify, I mean to spread your investments over a number of markets to decrease the risk and increase the chance of a more even return on your money.
To compare the various markets I will take the start price and end price for the year of each related index. An index is usually a cross section of the shares or commodities available in a particular market and is a good and easy way to chart the progress of the market over a given period.
Australia (AUS 200) vs United States (US 30)
The Australian index AUS 200 is a cross section of the top 200 stocks on the Australian stock market and the US 30 is the top 30 in America. This year the AUS 200 has hardly moved at 1.02%, whereas the US 30 has increased by 9.37%. The US market has done particularly well in the later half of the year whereas talk of a mining slowdown has definitely affected the AUS 200.
The Euro 50 Index is a collection of the top 50 European stocks. It has declined over 2014 by (-0.25%), probably not helped by the many European countries still struggling to recover from the effects of the Global Financial Crisis.
Gold hasn’t done well in 2014 giving a negative return of (-3.5%).
Oil has declined also a massive amount over the last 12 months (-79.81%). This has made customers very happy especially moving through the Xmas holiday period when many people go on holiday. Shale oil production in the US has apparently created a price war with the Middle East producers which has added to Oil’s problems.
So what’s the answer?
In years like 2014 when markets seem to go nowhere sometimes it is best left to the experts. As all these markets have not done well in 2014, I looked at a range of well managed market funds to see their results for 2014.
I chose Vanguard Investments as a well managed fund manager that offer various managed funds which cover most of the sectors I have been talking about. They are all Retail Managed Funds with a minimum initial deposit of $5,000.00.
All these returns are Performance returns from the Gross Funds column (before expenses) for 2014.
Vanguard Index Diversified Bond Fund 9.05%
Vanguard Index Australian Share Fund 4.11%
Vanguard Index International Shares Fund 17.40%
Now those returns are not too bad are they? For a year when many markets have struggled Vanguard have done very well. You can invest in these funds for $5000 minimum investment. You can also still take control of your own money but leave some of the management up to professionals such as Vanguard to diversify your portfolio across different market sectors and even different markets throughout the world. Please note, I am not necessarily recommending Vanguard above any other managed funds and only chose them for the purpose of this example.