There are lots of ways of measuring how an investment performs, but for your average investor the big question is likely to be: am I beating inflation?
Monday, April 26th 2004, 2:10AM
by The Landlord
Faced with this priority, the typical response from the financial planning and stockbroking fraternity over the years has been to reach for their favourite investment - company shares.
Over the very long term this strategy has worked brilliantly, but many 60-year-olds don't have the 20 years or so that the experts say is necessary to guarantee success. In the short term anything can happen.
For example, Mum and Dad who took the plunge in January 2000 and bought shares in the WiNZ Fund (which invests in an index of international shares) were looking at a negative real return of about 55 per cent by the end of last month. In other words, inflation has been about 10 per cent and the shares' value is down by 45 per cent.
That's not a great start, and it gets more depressing when you realise that if international shares return 7 per cent a year from here on - an optimistic assumption - the investment will take another 14 years to catch up to inflation at 2 per cent a year.
