Be it equities, savings or property, the question at the end of the day, -or year is, “How much annual return did I rake in?”
How to get a yearly 10% return on investment in Australia
The performance of the options that you choose to invest in usually varies. This is because performance is affected by a wide range of factors. The commonly known theory is that an investment option that has a higher risk attached to it should yield better returns on a long-run period compared that with low risk.
However, when it comes to money, we neither rely on theories nor long term investment options alone. Several factors have to be considered before deciding where you place your money.
The unwritten rule of starting any investment is to have a plan. The plan should be backed up by reasonable goals. This includes the returns you’re trying to get, the time it should take, among others.
The goals of each investor vary. As such, your investment choice should be accommodated and within your financial plan. So, what should you keep in mind if you are aiming for a 10% return?
Factors to consider if you want high returns:
Your investment timeframe
Sure, you want an annual return of 10-15 %, but what is your desired investment timeframe? Anyone telling you that you can quickly get over a 10% return in an investment of only a few months is lying to you.
Most investments that bring home two digits in the return basket are usually medium-term and long-term investment. This, however, doesn’t mean that short-term investments can’t yield the same.
Details about the investment
Determine if the investment/firm is licensed with ASIC in Australia, whether it is listed in companies that you shouldn’t deal with. To be safe, deal with an investment company that has been thoroughly tried beforehand.
Also, beware of the risks of your investment choice
Charges
Fees. Additional costs. Tax. All this should all be factored in too.
There are many other factors to be considered that have not been mentioned. We believe you, at least, have an idea of what to keep in mind.
Choosing the investment option to settle with can be very difficult. Factoring in the risk, performance, trends and all other factors can leave you confused about where to set your feet.
Below we compile a few options that are worth your money in Australia. These can earn you an annual 10% return if you play smart. Besides, we explain how to get that return as well as the things to watch out for. However, don’t be limited to this list.
Investment options
Before we delve further into this, you have to be aware that no investment is ‘safe.’ The term investment entails both rewards and risks. To get the first crack at this game, you have to understand both sides and know how to manage them.
For instance, the bank may offer what seems like a prudent investment. In reality, it is far from it. For a short term, it is indeed a perfect fix. However, if you are taking the long-term path, the interest you get will be swept away by inflations and taxes. In the end, you will be left with no gain.
Property, on the other hand, is a good investment option. Nonetheless, you have to be prepared for costs such as repair and maintenance.
It begs the question, “In what investment can I earn a 10% annual return?”
1. Stock
Backed by billionaire investor Warren Buffet, stock can be a rewarding investment if played well. Even though you can incur losses if you don’t play your cards well. Sometimes you can play your cards well and still fail to make profits due to unforeseen factors.
Publicly listed shares are a good start if the stock market is your thing. The play is to buy stocks and sell them at the moment they can fetch you good prices. Knowing the stock that will fetch you a profit is, no doubt, an uphill task.
It needs in-depth research and consideration of other factors such as:
- Equity/debt ratio
- The company’s position
- Competitors
- The company’s growth
- Performance over the years.
Financial advisors can also help you determine the best stock as some have an excellent track record in picking stocks. Their know-how of the economic situations, as well as strategies, is ideal.
Keep in mind that the stock market is volatile and make sure you are informed of all the factors that can affect your returns.
The right stocks will reward you with huge returns.
Index Funds Australia Returns
I am going to show you the returns of some popular index funds in Australia over the past 5 years:
| Index Fund | ASX Code | 1-Year Return | 3-Year Return | 5-Year Return |
|---|---|---|---|---|
| Vanguard Australian Shares Index ETF | VAS | 22.06% | 9.95% | 10.70% |
| iShares S&P/ASX 200 ETF | IOZ | 21.71% | 9.80% | 10.53% |
| BetaShares Australia 200 ETF | A200 | 21.61% | N/A | N/A |
| SPDR S&P/ASX 200 Fund | STW | 21.63% | 9.82% | 10.54% |
| VanEck Vectors Australian MSCI ETF | MVA | 22.28% | 9.61% | 8.88% |
Highest Return Index Funds
| Index Fund | Region | 1-Year Return | 3-Year Return | 5-Year Return |
|---|---|---|---|---|
| iShares MSCI India ETF | India | 31.50% | 22.30% | 24.32% |
| Vanguard Total China Index ETF | China | 28.31% | 17.80% | 16.65% |
| iShares MSCI Brazil ETF | Brazil | 39.69% | 17.32% | 14.34% |
| iShares MSCI Taiwan ETF | Taiwan | 28.14% | 16.82% | 14.22% |
| iShares MSCI Russia ETF | Russia | 49.12% | 16.64% | 12.68% |
2. Gold
Gold finds its way in the investment options not because of the returns it brings but because of its stability. We understand that you can be squeamish to the idea of investing your money because of the risk associated.
Apart from monetary policies as well as the supply & demand economic model, not many other factors affect gold. In Australia, there is more than one way to invest in Gold.
You can invest in physical products or through EFTs or by taking equity in gold mining companies. The stability gold offers come with slightly low gross returns, and it may take you a little longer before you bag that two-digit annual return.
3. Funds
Funds can be exchange-trade, mutual or equity. A well-managed fund with investments in, say, property can earn you a good reward. Funds in property give you diversity. They can enable you to invest in even small quality business centers, which is hard to do independently as an individual.
You can also take a holding in an equity income fund such as the Investors Mutual Equity Income Fund. The fund has averagely generated a yearly return of about 10% over the past four years.
Beware of the low returns in funds, especially those with majority Australian shares. You can also take a diversified approach. Keeping part of your fund in international managed funds is also a nice play. They average returns 10% upwards annually.
Be careful when choosing the funds. It is advisable to get a financial advisor’s opinion if you are a first-timer. Financial advisors can suggest well-managed funds for you.
4. Crypto
Crypto is an up-and-coming investment yet to reach maturity. All the same, it can generate good returns for you. You can either go for a CFD broker to get theoretical ownership or purchase the actual crypto. With a CFD broker, you earn from price movements.
Crypto has several benefits, and you can capitalize on its volatility downside. For instance, if you make the right price movement, the volatility can benefit you greatly as you will earn big.
The same volatility could bring you a significant loss, too, if you make the wrong prediction.
The above options aren’t guaranteed to give you a 10% return annually. It lies with your smartness, how much you want to invest, and the risk you are willing to take. These options only serve as a guide, and we hope this piece enables you to get solid returns.
