INVESTMENT PROJECTIONS
for the average investor who doesn’t have the time to dedicate to such research.
While it may be possible for experienced investors to undertake the research, even very skilled fund managers sometimes struggle to beat the index. For a portfolio starting at $200 a week, investing in the index via an ETF provides diversity.
If you were to invest $200pw in the Australian sharemarket, via an investment such as the Vanguard ETF, the portfolio would be worth about $62,705 in five years. This is assuming a gross annual dividend yield of 5.42% (including franking credits) plus capital growth of 3% a year. We have also assumed that income is reinvested each year.
This example illustrates that savings are a key driver of wealth. Over five years you would build a portfolio worth $63,000, which is a good level of savings and would provide a growing income stream.