U.S. Shares remain the top long term asset class for the 10th year

Credit: 2024 Vanguard Index Chart

Financial Planners are often asked "what is the best investment type?" and whilst the answer always depends on the unique circumstances of the individual, US shares have continued their fantastic decade long run into 2024.

Much of this performance can be credited to the 'magnificent seven' companies in the US: Alphabet (google), Amazon, Apple, Meta (Facebook), Microsoft, NVIDIA and Tesla.

These companies have performed so exceptionally as they continue to be at the cutting edge of technology and the AI boom.

However, the above and below graphs from Vanguard also demonstrate the importance of always having a well diversified portfolio. US shares have only been the best performing asset class for the given year 8 out of 30 years or 26% of the time. It is also important to note that things can change fairly rapidly. For the 15 years from 1994 to the GFC, US shares had even underperformed Australian Bonds, such was the magnitude of the US share market decline during the GFC.

Diversification helps smooth out (but not completely prevent) extreme volatility and provide more consistent returns.

If you need help with your asset allocation mix, then reach out for an obligation free initial chat.

Credit: 2024 Vanguard Index Chart