The 2022 Vanguard Index Chart: Australian Edition

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One of the key factors that differentiates successful investors from others is the ability to hold investments for the long term. Though assets such as equities can fluctuate in the short term, in the long run they tend to go up. The latest edition of the Vanguard Index chart for the Australian market shows how various asset values have increased over the past 30 years.

The following chart from Vanguard Australia showing the returns of various assets from July 1992 to June 30, 2022 for the Australian market:

Source: Vanguard Australia

US stocks were the best performers for the period shown. Australian stocks generated better returns then international equities. The chart also shows the leadership periods of various prime ministers of Australia and presidents of the US in addition to other major events.

The below table shows the financial year total returns for various asset classes:

Click to enlarge

The above table shows the importance of diversification.

Related:

Disclosure: No Positions

Mexico vs. China Manufacturing: The Cost Difference

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The Manufacturing industry is one of the major industries of the economy of Mexico. Manufacturing costs are cheaper in Mexico than China. In addition, Mexico offers many advantages over China with respect to manufacture of goods.

The following are few of the key cost differences between Mexico and China in manufacturing according to research by IVEMSA:

Labor – Wages in Mexico are 30% lower than wages in China.

Energy – Electricity costs are 4% lower in Mexico than China; Natural gas prices for commercial use are 60% lower in Mexico.

Transportation – Obviously transportation costs are very cheaper from Mexico to the US relative to shipping from China. The cost to move a 40ft container from China to the US in 2021 was about $10,000 and it took many times to arrive in the US. On the other hand, it costs about $240 to move a 53ft trailer from Mexico to the US. Moreover the truck would cross the border the same day.

Industrial Lease Space – The cost to lease an industrial building is 50% lower in Mexico than China.

Source: Mexico’s Manufacturing Costs, IVEMSA

The Vanguard 2022 Index Chart: UK Edition

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We reviewed The Vanguard Index Chart for Australian equities in an earlier post. In this post, let’s take a look at a similar chart for the UK market. British stocks have underperformed poorly relative to US stocks for the period from 1992 to 2021 as shown in the chart below. Since 1992, US stocks would have earned an annual return of 11.85% compared to just 8.01% for British stocks. Even Emerging and European Market equities yielded better returns than British equities.

The Vanguard 2022 Index Chart for UK market shows the returns of various asset classes from 1992 to 2021 . In addition, it shows the major world events and the periods of various British Prime ministers:

Click to enlarge

Source: Vanguard UK

Related ETF:

  • iShares MSCI UK ETF (EWU)

Download in pdf format:

Disclosure: No Positions

Stocks vs. Bonds: Which is Better To Beat Inflation?

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During high inflationary periods such as the one we are currently in now, many investors are in search of assets that would help them earn returns that are equal to if not better than the inflation rate. While bonds provide fixed income on a regular basis and the principal invested is safe for the most part, bonds are not the best asset class to beat inflation. Stocks on the other hand are ideal to own when inflation is high since dividends paid out by them can increase and also stocks can generate capital appreciation. Together the returns from these two sources can match or even beat inflation. Though the fixed income from bonds is consistent and regular, they are more exposed to inflation than stocks.

The following chart shows that stocks are better to match or beat inflation using the example of Canadian equities:

Click to enlarge

Source: A case for dividend investing, RBC Global Asset Management

Related ETFs:

iShares MSCI Canada Index Fund (EWC)

Disclosure: No positions