Consistent contributions make a lasting impact

We regularly talk about keeping it simple, having a strategy and focusing on the long term with your investments. Something we haven’t touched on previously is the benefits of regularly contributing towards your investment portfolio.

The broad ASX All ordinaries total return index has delivered an average annual return of 9.2% since 1993. If you had invested only $1,000 into the Australian share market in July 1993 and did nothing other than reinvest the dividends, you would have achieved a total return of 18.60% (excluding fees or taxes). By June 2023 the value would have grown to $14,150.?

How regular investments add up

It is only when you compare the numbers side by side can we appreciate how making simple regular contributions adds up in the long run.

Regularly contributing, combined with a sound investment strategy and the reinvestment of income distributions over time, can deliver much higher long-term compound returns.

Recognising dollar-cost averaging

Many may not be aware, but this is a strategy that many individuals are already indirectly doing through their Superannuation fund. If you are a member of an industry/retail fund and an employee, your employer will be regularly transferring SG (Super Guarantee) contributions to your fund. You can also make your own additional concessional and non-concessional top up contributions.

The fund will then be automatically investing these contributions towards your selected investment strategy. These will be allocated to different underlying assets based on your set preferences behind the scenes. These underlying assets will be priced differently day to day, and as a result, you will be “averaging” the cost every time they are purchased.

This strategy works the same way if you make regular contributions towards your investments (outside of super). You will be buying more or less units as market prices change, however over the total period your average costs may potentially be lower than if you tried to ‘time’ the market.

Ultimately, making frequent contributions and taking advantage of dollar-cost averaging adds up in the long run. As your balance rises over time, so will your distributions in the form of dividends and other payments. That's the power of compounding investment returns.

It is important to note that historical returns are not an indicator or guarantee of future performance. Please contact us on 03 9268 1118 or [email protected] to discuss our services further.

Alex, Anu and the team.

This report has been prepared by Alex Henderson & Anu Souvannavong

Shaw and Partners, Morrissey Wealth Management

Level 36, 120 Collins Street

Melbourne VIC 3000

Morrissey Wealth Management (Authorised Representative Number 268130) is a Corporate Authorised Representative of Shaw and Partners Limited (AFSL 236048) (ABN 24 003 221 583)

This market update is issued by Morrissey Wealth Management an authorised representative (no. 268130) (the “Morrissey Group”) of Shaw and Partners Limited AFSL 236048. This market update is confidential and may be privileged. Unauthorised use, copying or distribution of any part of this document including attachments is prohibited.? The views expressed are personal to the Morrissey Group and do not necessarily reflect the views of Shaw and Partners. This market update has been prepared without taking into consideration any investor's financial situations, objectives or needs. Accordingly, before acting on the advice in this document, if any, you should consider its appropriateness to your financial situation, objectives and needs. Every reasonable effort has been made to ensure the information provided in this document is correct, but we cannot make any representation nor warranty as to the accuracy, completeness or currency of that information. To the extent permissible by law, no responsibility for any errors or misstatements is taken, negligent or otherwise.? Shaw or its authorised representatives may also receive fees or brokerage from dealing in financial products, see Shaw’s Financial Services Guide for information about the services offered by Shaw available at https://www.shawandpartners.com.au/.