Index investing yield

The return on index investment and

Investing in indexes is one of the most popular and perhaps one of the best ways for individuals to invest. Its popularity is also increasing because more and more people are seeing the benefits . Of course, there are individuals who are so driven and skilled that they invest in individual stocks and make a fair amount of money from it.

By investing passively, you invest for the longer term. You invest in an index fund, which is managed for you and you pay the costs for this, and then you have a chance of a high return. You limit your risks because your investment is spread over a large number of shares, and you take the profit where you can. And of course it doesn’t always go well, but because of the spreading of your risk, you notice this almost less than if you were to invest in an individual share. But what kind of return can you actually expect? Keep in mind that here too, past returns offer no guarantees for the future.

MSCI indices returns over the past 10 years

If we look at the returns achieved by the MSCI indices over the past 10 years as an example, we see that the annualised return was around 4.6%. MSCI PERU achieved the highest return of 12.7% per year. The Nasdaq 100 achieved slightly higher returns, with 18% and the MSCI Greece achieved -25.3% per year. It is clear that the returns can vary considerably. They can grow and they can fall, and that is why the figures from the past should only be used as an indicative model, because no guarantees can be derived from them.

There will always be risks associated with investing. Keep in mind that the effects will often only be visible in the long term (of about 10 years). Although many people try to beat the market, only 20% of investors actually succeed in beating the market.