Why the Best Chance of Investment Success Lies in Endurance and Discipline
Imagine standing at the starting line of a marathon. You’re not thinking about the first kilometre—you’re focused on the long road ahead: pacing yourself, conserving energy, and staying mentally strong. That’s also the mindset of seasoned investors.
Too often, investing is mistaken for a sprint—a rush to quick profits, rapid trades, and fast wins. But just as sprinting through the early kilometres of a marathon can lead to burnout, chasing short-term market gains can derail your financial journey.
Markets are unpredictable, swayed by headlines, emotions, and economic shifts. Attempting to time these fluctuations typically leads to stress and poor decisions. Most people get it wrong, often harming their long-term returns.
In contrast, long-term investing is about endurance. It’s about setting a steady pace, remaining committed, and trusting the process. Over time, compounding returns begin to work their magic, smoothing out the market’s ups and downs.
Taking a 30-Year View
The 2025 Vanguard Index Chart tracks six major asset classes over three decades (1 July 1995 to 30 June 2025): Australian shares, U.S. shares, international shares (excluding Australia), listed Australian property, Australian bonds, and cash.
These asset classes represent the returns from specific market indexes or official sources. For instance, U.S. share performance is based on the S&P 500 Total Return Index (in Australian dollars). All return figures assume income distributions were reinvested and exclude fees, taxes, and transaction costs.
While past performance isn’t a reliable indicator of future results, the long-term trends offer valuable insights.
How Different Asset Classes Performed
The Vanguard Index Chart reveals how a $10,000 investment in 1995 would have grown by 2025:
U.S. Shares (S&P 500 Index): With an average annual return of 10.8%, the investment would have reached $214,332—a compound return of over 2,000%.
Australian Shares (S&P/ASX All Ordinaries): Averaging 9.3% annually, the investment would have grown to $143,786—a compound return of over 1,300%.
Cash (RBA Official Cash Rate): Earning just 4.1% annually, the investment would have reached $33,677—a compound return of 237%.
The data highlights the long-term power of compounding—particularly for those who stay invested through market highs and lows.
Why Diversification Matters
Asset class returns vary widely from year to year. The top performer one year can be the worst the next. For example:
In 2024–25, international shares led with an 18.6% return.
In 2023–24, Australian listed property returned 24.6%, outperforming both international (19.9%) and U.S. shares (24.1%).
Because no single asset class consistently leads the pack, diversification becomes essential. A balanced portfolio spreads risk and reduces volatility.
“The longer you hold a balanced portfolio, the more likely you are to experience positive performance,” says Burns. “Over a 10-year period, a 60/40 portfolio (60% stocks, 40% bonds) hasn’t produced a negative nominal return and shows far less risk of negative real returns compared to shorter periods.”
Investing Is a Marathon
Just as marathoners train with discipline and consistency, long-term investors build wealth by sticking to a plan, diversifying their holdings, and staying the course—no matter what the market brings.
Every investment carries risks, including the potential loss of principal. But with patience, discipline, and a well-structured strategy, investors give themselves the best chance of success.
Rick Maggi CFP, Financial Advisor Perth