The Australian Securities Exchange (ASX) have recently released some interesting charts and data looking at the long-term performance of the Australian Share Price Index and Accumulation Index over the past 109 years - Long-term Australian sharemarket returns.
The ASX have published the data in the context of the recent sharemarket volatility to show Australian share prices moving steadily higher through history. They also provide charts on the difference between the Share Price Index (dividends not reinvested) and the Accumulation Index (dividends reinvested). The charts show the strength of reinvesting dividends backk into the market. Over the 109 year history the average return from the Price Index was 7.48% with the accumulation index providing a return of 12.42%.
(Please note - we believe that this does not necessarily mean reinvesting the income back into the share from which it came, but more broadly about reinvesting back into the market as a whole. Take a look at Scott Francis' Eureka Report article - When it pays to reinvest - for more details on our views about dividend reinvestment.)
The ASX publication is another source of evidence that a long term approach to investing, with regular incremental investments over time, will lead to a successful investment outcome.