Australian Asset Review —Enrichment Success PTY LTD

Market Review

How Australian asset classes have moved over the last 20 years

A descriptive look at historical ranges. No forecasts.

When clients ask us "what is a normal return?" we usually push back on the question. There is no single normal —the answer depends on which 20-year window you pick, which asset mix, and whether you adjust for inflation. What we can do is describe the range.

Australian equities

Over rolling 20-year windows, the All Ordinaries has delivered long-run nominal returns in the high single digits to low double digits, with real returns after inflation materially lower. Along the way, there have been drawdowns of 40 to 50 per cent —the early 2000s, the GFC, the 2020 COVID shock. Anyone building a plan that assumes no drawdown is planning against history, not with it.

Cash and fixed interest

Cash returns have tracked the cash rate, which over the last 30 years has moved from double digits in the early 1990s to near zero in the 2010s, back to 4 per cent plus in 2023-24. The 2010s were an anomaly; the longer average is higher. Income-focused clients who remember 1990s deposit rates are planning off a different world.

Residential property

Australian residential property has had very long upswings and shorter corrections. The 2010s saw substantial price growth in Sydney and Melbourne, followed by a 2017-19 correction and the 2020-21 upcycle. The data shows clearly that property is not a one-way bet, even in Australia.

Property and equities have different long-run patterns

The point

Every asset class has had a period where it looked unstoppable, and a period where it looked broken. The planning conversation is not about picking the next unstoppable one. It is about building a mix that survives the broken periods without forcing a sale.

Sources: RBA, ABS, ASX historical data. This note is descriptive and does not constitute investment advice.

Business

Choosing a business structure: company, trust or sole trader

A framework for thinking about structure, asset protection and succession.

The structure a small business chooses in its early years has long-run consequences for tax, asset protection, saleability and succession. This note describes the main options; it is not legal or tax advice.

Sole trader

Simplest and cheapest to set up. The owner and the business are the same legal entity. All business income is taxed at the owner's personal marginal rate. All business liabilities are the owner's personal liabilities. This is appropriate for very low-risk, low-turnover activities; it exposes personal assets (home, savings) to business creditors.

Company

A proprietary limited company is a separate legal entity. Income is taxed at the company rate (currently 25-30 percent depending on turnover). Directors have limited liability, subject to director duties and insolvency rules. Companies are more expensive to run (registration, ASIC fees, annual statements) and are easier to sell or bring investors into. Profits retained in the company cannot be accessed personally without dividend taxation.

Trust (discretionary)

A discretionary trust (often called a family trust) distributes income among beneficiaries at the trustee's discretion. This allows income to be streamed to beneficiaries on lower tax rates. Trusts do not themselves pay tax; income is taxed in the hands of beneficiaries. Trusts are more complex to set up and require a deed, annual tax returns and a trustee (often a company). Asset protection is stronger than sole trader but not absolute.

Asset protection

No structure makes a business owner completely immune to legal claims. Companies protect against most trade creditors but not against director penalties, personal guarantees or negligence claims. Trusts can ring-fence business assets from personal creditors of individual beneficiaries, but only if set up before the risk materialises. Retroactive restructuring to avoid an existing creditor is generally ineffective.

Succession and sale

Companies are straightforward to sell: the shares change hands. Trusts are harder to sell because the underlying assets are owned by the trust, not the individuals. Sole traders have no saleable entity; the business effectively dissolves with the owner. These trade-offs should be considered at set-up, not when a sale or succession is being planned.

The planning point

The right structure depends on the business's risk profile, turnover, growth plans and succession intentions. A restructuring conversation with an accountant and lawyer is appropriate before significant assets accumulate in the business.

This note is general information only. Not legal or tax advice. Consult a lawyer and registered tax agent.

Australian Major Asset Market Review