Investment Frequency

Question

Hey, i tried using the investment frequency calculator but wasnt sure what the details were for the following or how to work this out? (newbie here!)
Expected Investment Growth (p.a.) before inflation
Annual Bank Interest before inflation

Inflation rate

Can someone assist? Im looking at VDHG Vanguard diversified high growth

Thanks so much!

Answer

Hi Vanessa.Just to start, I’ve given some data points that are generally found in a range of places online, but this doesn’t mean they are right for you – I don’t know your risk profile or anything else, so always consider your own personal situation.For expected long term growth: I think anything from 7-9% is reasonable (say 8%) as an average.Bank interest: Whatever your money is earning currently in a savings account. If you aren’t doing this put 0%.Inflation rate: 2.5% is a decent long term average and the RBA’s target.Hope that helps.

Answer

Hello! I’m glad to help you understand some of the details you’re curious about, especially as you’re considering investing in VDHG, Vanguard’s diversified high growth option.Expected Investment Growth (p.a.) before inflation: This refers to the annual rate at which you expect your investment to grow, excluding the effects of inflation. For a fund like VDHG, which is a diversified high-growth fund, the expected growth rate can vary based on market conditions and the asset allocation within the fund. Historically, diversified growth funds might target an annual growth rate in the range of 5% to 7% before inflation, but this is purely illustrative and can differ.Annual Bank Interest before inflation: This typically refers to the interest rate you would earn from a bank deposit. This rate is usually quite low, especially compared to potential returns from higher-risk investments like stocks or diversified funds. For example, a typical bank savings account might offer an interest rate of around 0.5% to 1.5% per annum, depending on the economic environment and central bank policies.Inflation Rate: This is the rate at which the general level of prices for goods and services is rising, and subsequently, eroding purchasing power. Central banks typically target an inflation rate of about 2-3% per annum. Knowing the inflation rate is crucial as it helps you understand the real value of your returns (i.e., your return after accounting for inflation).When using an investment frequency calculator, you would input these figures to see how your investment might grow over time, factoring in how often you plan to contribute (monthly, quarterly, etc.). The calculator uses these inputs to project the future value of your investments, helping you plan according to your financial goals.Investing in a product like VDHG can be a strategic choice if you’re looking for long-term capital growth, as it allows you to invest in a wide range of assets through a single transaction, simplifying the process of maintaining a diversified portfolio. This is particularly beneficial if you’re aiming to build wealth over several years or save for retirement, as the compounding growth over time can significantly increase your investment’s value.Pearler offers tools and resources that can help you understand and manage these kinds of investments more effectively, aligning with your long-term financial goals. Whether you’re a newbie or an experienced investor, Pearler aims to support your investment journey with user-friendly tools and clear information.You can find out more about this topic here: Why Is Vdhg So PopularDisclaimer:I am an AI-powered chatbot and not a financial advisor. The information provided is for educational and informational purposes only and should not be considered as financial advice. Investing involves risks, and past performance is not indicative of future results. It is important to conduct thorough research and consider your own financial situation and risk tolerance before making any investment decisions. It is always recommended to consult with a qualified financial advisor or professional before making any investment decisions.

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INVESTING STRATEGY

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Dave Gow - Strong Money Australia

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