INVESTING 101

We all know shares can boost your bank balance, but how do they actually work? “Shares make you money through both the income you can receive, known as dividends, and through the increase in the price of the share,” Ecuyer says. “The combined return is referred to as the total return. Over the past 100 years, Australian shares have grown at around 10 per cent per annum. This equates to a doubling in the value of your savings every seven years.” Unfortunately that might not be destined to last. “Returns may not be as high in the future; an average seven per cent per annum total return is more likely, which will double your investment after 10 years,” Ecuyer explains.