2025 Vanguard Index Chart highlights large returns gap between shares and cash

Daniel Shrimski

Share market investors on average achieved at least triple the dollar returns of individuals who chose to keep their cash tied up in savings accounts over the last 30 years, the 2025 Vanguard Index Chart shows.

Released today, the chart shows how a $10,000 investment made across the Australian share market^[1] on 1 July 1995 would have grown to over $143,000 by 30 June this year. This compares with an end balance of less than $34,000 if the same amount had been held exclusively in a cash savings account.

The total return would have been even higher from a $10,000 investment in United States shares^[2] over the same period. It would have grown to more than $214,000 – over $180,000 higher than the total return from cash and more than $70,000 above the total return from Australian shares over the last 30 years.

U.S. shares were the strongest-performing major asset class over the last 30 years, delivering an average return of 10.8% per annum. This compared with a 9.3% per annum average return from Australian shares, 8.3% from international shares^[3] (excluding Australian shares), and 8% from Australian listed property securities^[4]. Australian bonds^[5] returned 5.5%, while cash^[6] was the lowest-returning major asset class, delivering an average total return of just 4.1% per annum.

The total returns for all asset classes assume any income earned over the period was reinvested, and excludes investment acquisition costs, fees, and taxes.

How a $10,000 investment would have grown over 30 years

Source: Vanguard. *Excludes any acquisition costs, fees and taxes, and assumes all income was reinvested. All figures are nominal values and have not been adjusted for inflation. Past performance is not a reliable indicator of future performance. The performance of an index is not an exact representation of any particular investment, as you cannot invest directly in an index.

Investing with a marathon mindset

While the Vanguard Index Chart compares the total returns from different asset classes over time, it also demonstrates why it’s important for investors to have a long-term approach to investing.

The measurement period for the 2025 Vanguard Index Chart incorporates a number of significant events that led to major share market corrections, including the dot.com crash in 2000, the Global Financial Crisis over 2008 and 2009, the 2020 COVID crash, and the more recent market volatility associated with the imposition of high U.S. tariffs on some countries.

“Vanguard’s index chart clearly illustrates why investing should be viewed as a marathon, not as a sprint,” said Daniel Shrimski, Managing Director, Vanguard Investments Australia.

“Just like superannuation, investors should be focused on achieving longer-term outcomes rather than on shorter-term investment wins and losses.

“The index chart demonstrates how investment markets have kept rising strongly over time, despite several significant share market corrections, economic downturns, changes in governments and world leaders, wars, natural disasters, and more recently, the impacts stemming from the COVID-19 pandemic.

“The most successful investors have a disciplined approach to investing and understand that volatility is typically transient. The best investment results are generally achieved through compound growth over time, not by trying to time when to buy and sell to maximise gains. That’s a futile exercise.”

Avoid chasing asset class returns

Another key learning from the Vanguard Index Chart is that the returns from different asset classes will vary from year to year.

U.S., Australian and international (ex-Australia) shares all delivered double-digit average annual returns to investors over the five years between 1 July 2020 and 30 June 2025.

International shares (ex-Australia) was the best-performing asset class in the 2024-25 financial year ended 30 June, returning 18.6%, followed by U.S. shares (17.4%).

Australian listed property had the next-highest returns over the last financial year, returning 14%, while Australian shares returned 13.2%. Meanwhile, higher interest rates saw Australian bonds deliver an average return of 6.8%, while cash returned 4.4%.

By contrast, Australian listed property was the best-performing asset class in the 2023-24 financial year, returning 24.6%, followed by U.S. shares (24.1%), and international shares (19.9%).

Australian shares had returned a substantially lower 12.5% in 2023-24, while cash returned 4.4%, which was above the 3.7% return from Australian bonds.

“The best and worst performing asset classes in any one financial year rarely mirrors the returns of the previous financial year for a whole range of reasons,” Mr. Shrimski said. “That’s why it’s so important to have a diversified mix of investments that spreads your capital across different asset classes and different regions.

“While share markets have delivered the strongest returns over the longer term, there have been some years when more defensive assets such as bonds, and even cash, have achieved the best returns. It’s all about spreading risk to help smooth out your returns over time.”

Each year, Vanguard’s index chart is downloaded and used by thousands of financial advisers and individual investors as an educational resource to provide a clear picture of the long-term market growth across all major asset classes.

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Notes:
[1] The examples of an investment of $10,000 into Australian shares on 1 July 1995 and the corresponding outcomes as of 30 June 2025 expressed are based on the past performance of the S&P/ASX All Ordinaries Total Return Index. They assume the $10,000 is fully invested (and remains fully invested). The calculations assume no acquisition costs, fees or taxes, with all distributions reinvested. All results are displayed in nominal dollars i.e. inflation has not been taken into account. An actual investment would be subject to acquisition costs, fees and taxes.
[2] The examples of an investment of $10,000 into U.S. shares on 1 July 1995 and the corresponding outcomes as of 30 June 2025 expressed are based on the past performance of the S&P 500 Total Return Index (in AUD). They assume the $10,000 is fully invested (and remains fully invested). The calculations assume no acquisition costs, fees or taxes, with all distributions reinvested. All results are displayed in nominal dollars i.e. inflation has not been taken into account. An actual investment would be subject to acquisition costs, fees and taxes.
[3] The examples of an investment of $10,000 into international shares on 1 July 1995 and the corresponding outcomes as of 30 June 2025 expressed are based on the past performance of the MSCI World ex-Australia Net Total Return Index AUD Index. They assume the $10,000 is fully invested (and remains fully invested). The calculations assume no acquisition costs, fees or taxes, with all distributions reinvested. All results are displayed in nominal dollars i.e. inflation has not been taken into account. An actual investment would be subject to acquisition costs, fees and taxes.
[4] The examples of an investment of $10,000 into Australian listed property securities on 1 July 1995 and the corresponding outcomes as of 30 June 2025 expressed are based on the past performance of the S&P/ASX 200 A-REIT Total Return Index. They assume the $10,000 is fully invested (and remains fully invested). The calculations assume no acquisition costs, fees or taxes, with all distributions reinvested. All results are displayed in nominal dollars i.e. inflation has not been taken into account. An actual investment would be subject to acquisition costs, fees and taxes.
[5] The examples of an investment of $10,000 into Australian bonds on 1 July 1995 and the corresponding outcomes as of 30 June 2025 expressed are based on the past performance of the Bloomberg AusBond Composite 0+ Yr Index. They assume the $10,000 is fully invested (and remains fully invested). The calculations assume no acquisition costs, fees or taxes, with all distributions reinvested. All results are displayed in nominal dollars i.e. inflation has not been taken into account. An actual investment would be subject to acquisition costs, fees and taxes.
[6]The examples of an investment of $10,000 into Australian cash on 1 July 1995 and the corresponding outcomes as of 30 June 2025 expressed are based on the past performance of the Bloomberg AusBond Bank Bill Index. They assume the $10,000 is fully invested (and remains fully invested). The calculations assume no acquisition costs, fees or taxes, with all distributions reinvested. All results are displayed in nominal dollars i.e. inflation has not been taken into account. An actual investment would be subject to acquisition costs, fees and taxes.