While it’s impossible to predict when the best and worst returns will occur, we know that missing just a few days of positive market gains can significantly reduce the value of your investments.
The following tool illustrates the potential differences in returns from missing the 10 best market days in the Australian and various overseas share markets.
This chart shows how a notional $10,000 investment would have been affected if the 10 best days were missed. We use daily returns of the ASX/S&P 200 Accumulation index (Source: Datastream) for the calculations, from 31 Oct 2003 to 05 Nov 2018.
Australia is a relatively new market for Australian investors because it was only opened to foreign investors in 19XX. This short history, combined with a relatively high level of volatility when compared to more developed markets, should be taken into account when assessing this market.
Remember, indexes are not a representation of a financial product - they do not take account of costs or tax and do not reflect the performance of any individual portfolio of stocks.
Past performance is not a reliable indicator of future performance. Investing in shares is subject to risk, and there is no guarantee that an individual investor will make a profit by investing in sharemarkets.