The Australian share market, when measured by the broad S&P/ASX All Ordinaries Total Return Index, has delivered an average annual total return of 9.2% since mid-1993.

Thirty years ago, Australia was still emerging from the economic downtown that then prime minister Paul Keating had famously described as “the recession we had to have” when he had held the role of treasurer in 1990.

Having been as high as 17.5% in 1990, official interest rates had been cut back aggressively to 5.25% by early 1993 to help stimulate economic growth. The rate cuts also bolstered returns on the Australian share market.

If an investor had invested $1,000 into the broad Australian share market on 1 July 1993 and done nothing other than reinvest the company income distributions they had received, their investment would have achieved a total return of 18.6% and increased to $1,184 by 30 June 1994. The numbers exclude investment fees or taxes.

And if that $1,184 investment balance was just left alone for the next 29 years, aside from reinvesting the income distributions received over time, it would have grown to $14,150 by 30 June 2023. That’s a huge total compound return of more than 1,300%.

But it’s nowhere near as big a return as it would have been if an investor had followed a simple regular investments strategy over the same period.

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