I've already written about the return figures for 2023, but it's also worth looking at different investment assets from a longer-term perspective.
Our weekly chart shows Cumulative results of investments in selected assets over 20 years (represented – except for gold – by relevant stock indices). This is a long enough period to be able to draw so-called statistically significant conclusions.
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The first thought that comes here is that it is worth the investment. Note that Each of the assets presented here, even the relatively weak ones, managed to beat inflation for 20 years.. Yes, there were individual years when the results were below inflation (most recently – 2022), but over the long term, the investments shown here allowed the real value of money to increase.
Which assets performed better?
Of course, it goes without saying that some assets have performed better than others. The best example of this is the difference between the shares of small and large Polish companies. Investment in the first (represented by the sWIG80 index in the TR version, “total profit”, i.e. taking into account the income from dividends) In 20 years it would grow… 1100 percent. (which gives about 13.3% per annum).
Meanwhile, investing in shares of large Polish companies from the WIG20 index (also in the dividend version), would earn less than 200 percent, or 5.6 percent. annually. statement? In the long term, the smaller companies on the WSE had much more potential – this may also be an indication of the future.
Our chart also shows that other very strong contenders for the portfolio are US stocks (9.7% annualized in USD) and gold (8.6%).
What about corporate bonds?
Bonds can complement a portfolio. Admittedly, they don't beat the best stocks over the long term (the so-called wholesale fixed-rate bond index returned 4.6% per year over 20 years), but at the same time. They can boast much smaller fluctuations in results from year to year.
Unfortunately, due to the lack of an official benchmark, our chart does not include corporate bonds (issued by companies), which we estimate will be somewhere between Treasury securities and stocks in terms of yield.
Of course, these Calculations are not a guarantee of future results – due to uncertainty, it is worth maintaining an appropriate diversification of the portfolio. But the long-term hierarchy in rates of return is pretty clear: stocks generally have the greatest potential, followed by gold and then government bonds.
Tomáš Hondo, Quercus TFI Senior Economist
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