The 2024–2025 financial year has been another good one for investors. Those with a large exposure to growth assets such as property, shares and infrastructure did especially well, but even investors who chose a conservative approach will be pleased with their returns.

The typical balanced growth portfolio returned 13 per cent according to Lonsec Research. That strategy holds around seventy per cent of its money in the growth sectors mentioned and thirty per cent in stable, defensive areas such as government bonds and cash deposits.

Non-super investment accounts with that asset mix should have provided around 13 per cent before tax, which may need to be paid. Super funds pay 15 per cent tax on their earnings internally, so member returns will be a little lower, probably around 12 per cent.

Australian shares as measured by the All Ordinaries Index returned 13.2 per cent. Both large and small companies did well but industries saw big differences in returns. Industrial companies made 27 per cent while mining companies lost 4.5 per cent due to weak commodity prices. 

International shares stood out, making 18.6 per cent on average according to the MSCI Index. The best performing markets were in Hong Kong and Germany, both earning over 30 per cent, while Japan lagged with just 2.3 per cent.  

Returns from property investments diverged greatly. Property companies and funds traded on the stock market did really well earning 13.7 per cent as investors look ahead and anticipate interest rates falling further. Infrastructure funds also did well.

However unlisted commercial properties that are valued by valuers looking back at past sales did poorly, losing 4.1 per cent. Even though rents have been rising there still haven’t been many buyers in the market.

Cautious investors who chose fixed interest will be pleased to know Australian income funds averaged 6.8 per cent return while overseas fixed interest earned a little less according to the Bloomberg Indices. Cash as indicated by the Bank Bill Index paid 4.4 per cent for the year.  

Over the last five years share and property investments have all done well, as that period started from a lower point just after Covid hit. Ten year returns have been lower but still sound.

Balanced growth portfolios have earned investors 7.8 per cent per annum for the last ten years according to Lonsec Research. Defensive fixed interest investments averaged less than 3 per cent per annum.

This shows money in the bank isn’t a suitable long term investment. Investors should consider other options and talk to a professional adviser.