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Investment. What investors earned and lost over the last 5 years

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10.10.2017

Gold, deposits, property, shares. Which of the assets has brought investors the highest return for the last five years? The profitability of investments in different asset types in his blog on HB calculated lecturer at Edinburgh business school Ivan KOMPAN. "Ministry of Finance" gives an abbreviated text of the article.

Investment advisers typically suggest to invest only the money that will not need you for at least five years. And this, in my opinion, one of the key rules of individual investments can save you from having to sell assets at the worst possible moment.

So, five years. What happened or could happen to the average Ukrainian, invest it five years ago, some amount, such as $1,000 in...

... the Ukrainian stock market. It's frightening to think! Investment in the post-Soviet industrial crap, which comprises the index of the Ukrainian exchange, you just would have ruined. The last five years, the annual decline amounted to -17.5%, which means that the investment of $1,000 would have remained only $381.

... Bank cell. The same "mattress" only for a fee in exchange for the illusion of security. Yield is impossible to count, since no one except you and perhaps "interested" Bank officers and their accomplices, doesn't know how much and what is in your cell is. Nevertheless, it is obvious that the result is negative, because the smallest cell costs about 15-20 USD per day.

... Ukrainian real estate, the price of which decreased on average by 6-7% annually. This means that every thousand dollars invested in housing, would have been $696. Of course, you can argue that there is the income from the rent. I agree, but they usually are in a very grey area, and to consider them is extremely difficult. For our calculations I just assumed that the rental income offsetting the costs associated with the repair, finding tenants and handling the consequences of their residence, payment of utility bills during the "downtime" of the apartment and the extremely low liquidity of such investments.

... Bank Deposit. Those who five years ago entrusted their savings dollar Bank decent, something earned. On average, about 3% per annum, which turned their initial investment of $1,159. A little, but still... the same people who patriotically kept on Deposit hryvnia, listening to the assurances of the Bank on its stability, I threw out a third of the money "rsaci reforms." As a coach into a pumpkin, and $1,000 turned into $667. Of course, you can argue that the last five years – not an indicator, because these were the years of revolution, war, restructuring of the banking sector and other tests. But on the other hand we have in the country always some disasters, so expect that another five years will pass without shocks, at least, naive.

... gold. Not the best investment idea in the specific Ukrainian conditions, given that you need to buy physical gold bullion for storage which you want to pay. And the spread – the difference between the purchase price and sales, established by Ukrainian banks, totally godless – 20-25%. But even if we ignore the local context, in the international markets over the past five years the price of gold fell, on average, 6.2% per year, making, in the end, your thousand $725.

... in the U.S. stock market, which is growing steadily for nine years. Of course, six months ago, this operation was not entirely legitimate, but now possible! Over the past five Vanguard S&P 500 ETF, an index Fund mimicking the S&P 500 index grew, on average, 12.4%. Great result, and at the end prize of $1,792. Another year and your initial investment will be doubled! There many Ukrainian businessmen, not counting the professional "reformers", increased his wealth doubled over the last five years?!

Of course, no guarantee that the us market will delight you always. Although in the last hundred years the average annual yield was over 10%, and that gives some hope. There is no doubt that we can expect a period of "irrationality" may be protracted for several years. However, if you want to make your money earn real income, nowhere to go – will have to understand, and it is not too difficult, as the functioning of international capital markets. For new buildings and deposits especially not earn.

 
 

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