I HAVE long believed that good shares and property will give the best returns over the long haul. However, it is important to keep in mind that the date you make the investment can have a huge effect on the outcome.
Think about two people we will call Jack and Jill who retired a few years ago. Jack put $100,000 into a fund that matched the All Ordinaries Accumulation Index (which includes income and growth) on 1 January 2008 - left alone it would now be worth $90,600.
Suppose Jill put $100,000 into the same fund on 1 January 2009 - it would now be worth $143,600.
The difference of just one year in the date of the investment means that Jill now has 50% more money than Jack.
But that's only on paper. It's highly likely that Jack got such a shock when the global financial crisis hit that he panicked and cashed in for just $66,500. He was probably telling himself that he would re-enter the market when it had turned.
As a result, he missed the surge that happened in 2008 and his money is still sitting in cash.
Jill may well have been too scared to invest in January 2009 and so also missed the upturn. If she had waited till 1 January 2010 to invest that hundred thousand dollars it would be worth just $104,000 now.
There are two lessons here. The first is that luck does play a part in investing, especially when returns are looked at over a relatively short term. Also, it's important to formulate a strategy and stick with it. Trying to time the market almost never works.
Noel Whittaker is the author of Making Money Made Simple and numerous other books on personal finance. His advice is general in nature and readers should seek their own professional advice before making any financial decisions. Email: email@example.com.