AMP Capital’s Head of Investment Strategy and Economics, and Chief Economist, Dr Shane Oliver shares his top five investment mantras in the latest episode of AMP’s Simplifying Super* podcast.
At the top of the list is make the most of the power of compound interest, which Dr Oliver says can lead to exponential growth in returns over time.
“The way to make the most of compound interest is to invest in assets that over a long period of time grow with the economy and provide higher rates of return… if you’d put $1 in the Australian share market in 1900 and reinvested your earnings on that investment, it would have grown to over $600,000 today, with an average return of about 11.5 per cent.”
Dr Oliver’s second mantra is don’t get thrown off by the cycle.
“Soon after I started my career in investing in 1984, the share market fell 50 per cent over two months in 1987… if I had sold everything then I would have missed out on the recovery of the share market and the magic of compound interest.”
Dr Shane Oliver (R) shares his core investment mantras with Simplifying Super host, Adam Marsters (L).
He also suggests that Australians invested over the long-term turn down the noise and check their investments less.
“If you think about the share market, turn on the nightly news and track it from day to day, it’s virtually 50/50 if you get good news or bad news on the share market… in Australia, if you looked at the share market once a decade over the last 120 years, 100 per cent of the time you will have got good news.”
Dr Oliver’s top five mantras are:
- Make the most of the power of compound interest
- Don’t get thrown off by the cycle
- Invest for the long term
- Diversify
- Turn down the noise
You can listen to Dr Oliver discuss these concepts in detail in episode #10 of the Simplifying Super podcast, available through Spotify, Apple Podcasts and Google Podcasts.
Simplifying Super aims to de-mystify the often-complex world of superannuation and retirement, drawing on the knowledge of AMP’s experts.
* The podcast is general in nature and hasn’t taken your circumstances into account. Remember the value of investments may go up or down and you may not get back the amount you invested. It’s important you consider your personal circumstances and consider speaking to a financial adviser before deciding what’s right for you. The opinions and views featured in this podcast reflect the individual’s own. Date of publication 9 July 2021. AWM Services Pty Ltd (ABN 15 139 353 496).
