Real Estate Investment:Today

Imagine investing $100 in 1926

Imagine if you invested $100 back in 1926 –  the following chart from AMP’s Shane Oliver shows what would have happened.

It’s obvious that over very long periods the power of compounding works wonders for shares and property compared to bonds and cash.

Australian residential property delivered an average total return (capital growth plus net rental income) of 11% pa over the last century, which is similar to the return for shares.

What about gearing?

Of course, what this doesn’t show is how the much better property performs because of the benefits of gearing and leverage.

If you had $100 to invest back in 1926 could have bought $500 worth of property and your returns would be significantly higher than you if you invested in shares.

Shane Oliver explains:

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