Calculate total investment returns including capital gains, franked dividends, and CGT. Applies Australian tax rules including 50% CGT discount for assets held >12 months.
| Item | Value |
|---|
Capital Gains Tax (CGT): Gains on assets held >12 months receive a 50% CGT discount. Net capital gain is added to taxable income.
Franking Credits: Dividends paid from tax already paid by the company (at 30% corporate rate). You receive the dividend plus a franking credit. If your marginal rate is below 30%, you may receive a tax refund.
ASX 200 benchmark: Long-term average total return ~9–10% p.a. (capital + dividends reinvested).
Investment growth combines three elements: your initial lump sum (if any), regular contributions you add over time, and the compound return earned on both. Over long periods, the investment return component often exceeds the total amount contributed — this is the power of compound growth applied to investments.
| Initial | Monthly Contribution | After 10yr | After 20yr | After 30yr | Total Contributed |
|---|---|---|---|---|---|
| $10,000 | $0 | $20,610 | $42,478 | $87,549 | $10,000 |
| $0 | $500 | $87,358 | $267,490 | $650,728 | $180,000 |
| $10,000 | $500 | $107,968 | $309,968 | $738,277 | $190,000 |
| $50,000 | $1,000 | $278,282 | $734,720 | $1,721,088 | $410,000 |
| Asset Class | Long-Run Avg Return | Risk Level | Notes |
|---|---|---|---|
| Australian shares (ASX 200 total return) | ~9-10% p.a. | High | Includes dividends, significant volatility |
| International shares (hedged) | ~8-9% p.a. | High | Diversification benefit |
| Property (residential, direct) | ~7-8% p.a. | Medium-High | Includes capital growth + yield |
| Balanced super fund (net of fees) | ~6.5-8% p.a. | Medium | Diversified, tax advantaged |
| Bonds / fixed income | ~3-5% p.a. | Low-Medium | Capital stability, lower return |
| High-interest savings | ~4-5.5% p.a. | Very Low | Guaranteed, variable rate |
Nominal returns are the headline return percentage. Real returns account for inflation — the actual increase in purchasing power. With Australian CPI running at approximately 3.2% in 2025-26, a nominal 7% return delivers a real return of approximately 3.7% (7% - 3.2% = 3.8% real). Over 20 years, this difference significantly affects the purchasing power of the final balance.
What is a realistic investment return in Australia?
Over long periods (20+ years), a diversified Australian share portfolio has returned approximately 9-10% p.a. including dividends. Balanced super funds have averaged 6.5-8% net of fees over 10-year periods. For financial planning, using 6-7% as a conservative long-run assumption is common among Australian financial advisers.
How much should I invest each month?
The amount depends on your goals and circumstances. As a starting point, the 50/30/20 rule suggests saving 20% of take-home pay — split between short-term savings and long-term investments. At $70,000 net salary, this is approximately $1,080/month. Super contributions (which are a form of investment) are separate and additional.
What is dollar-cost averaging?
Dollar-cost averaging means investing a fixed amount at regular intervals regardless of market prices. When markets fall, your fixed amount buys more units; when prices rise, it buys fewer. Over time, this averaging effect reduces the risk of investing a large lump sum at a market peak. Most Australian superannuation and managed fund investments use this approach automatically through regular contributions.
Should I invest in shares or property in Australia?
Both have delivered strong long-run returns in Australia. Shares offer liquidity, lower transaction costs, and easier diversification. Property offers leverage (borrowing to invest), potential negative gearing tax benefits, and a tangible asset. Most financial advisers recommend a diversified approach — using super for share-based investing and considering direct property only when financially ready.
How does inflation affect my investment returns?
Inflation erodes purchasing power. A 7% nominal return with 3.2% inflation gives you a real return of approximately 3.8% in purchasing power. This means $100,000 invested at 7% for 20 years grows to $386,968 nominally — but in today's dollars (adjusted for 3.2% inflation), it is worth approximately $217,000. The real return is what matters for retirement planning.