The Motley Fool

Why 95% of us have No Financial Idea

It seems just 5% of us think investing in shares or our superannuation is a good move.

I’m not sure how the remaining 95% of us expect to have a comfortable life in retirement.

That’s according to the latest Westpac and Melbourne Institute Index of Consumer Sentiment, which showed investors mostly favour putting their money in the bank (30%), buying real estate (25%) or paying down debt (17%). Just under 10% of respondents thought shares were a good idea, and only 5% thought adding to super was wise.

We got it wrong in 2012, and we’ve likely got it wrong now…

As the  Australian Financial Review (AFR) reports, when the bull market began in June 2012, just 5% of respondents thought investing in shares was a smart move. The S&P/ASX 200 Index (Index: ^%AXJO) has climbed 36% since then, including dividends.

And if you had owned the banks, (which many of us do), you would have seen returns of 77% on Australia and New Zealand Banking Group (ASX: ANZ), 83% on Commonwealth Bank of Australia (ASX: CBA), 67% in National Australia Bank (ASX: NAB) and 88% in Westpac Banking Corporation (ASX: WBC). Not bad when you compare that to sub 5% rates on term deposits!

At the same time, 32% of us thought money in term deposits was still better.

Virtually every study ever conducted on which asset class is the best to invest in over long periods time shows that shares come out on top. But unfortunately, it seems investors have been scared off by the global financial crisis, and are now missing out on the gains.

With ‘real’ returns on Australian term deposits threatening to turn negative, it may be time investors woke up and ‘smelled the roses’. Unless you have substantial assets already, owning shares is likely going to generate the highest returns over the next 10, 20 or 30 years, compared to any other asset class.

What are you waiting for?

These 3 stocks could be the next big movers in 2020

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

In this FREE STOCK REPORT, Scott just revealed what he believes are the 3 ASX stocks for the post COVID world that investors should buy right now while they still can. These stocks are trading at dirt-cheap prices and Scott thinks these could really go gangbusters as we move into ‘the new normal’.

*Returns as of 6/8/2020

Motley Fool writer/analyst Mike King doesn't own shares in any companies mentioned. You can follow Mike on Twitter @TMFKinga

Related Articles...