I recently got an email blurb from a fund manager boasting that they had an average return of 9% over 15 years therefore they were superstars. This prompted me to do a bit of Google-fu and look up the latest stats for the All Ords Accumulation Index and its long term return. The average long term rate of return for this index sits at 13.2% – so by buying an index fund, reinvesting the dividends, and sitting on your hands you could have beaten our self styled superstars average performance by 46.6%.
If you right click on the image below and select open in new tab you can see an enlarged version.
Its even better than 46.6%, you will actually beat them by approx 76%. And the outperformance will just wider over time.
Compounding is geometric. Every footh-teenth of extra return you can get counts 🙂