Most of the time, investors spend a lot of time trying to guess which asset is going to be the best performer in the next month. They scour the markets, the various stocks, BDRs, ETFs and exotic assets. In the end, they discover that the task of predicting the short-term return on any asset is extremely difficult.
When we look into the past and see what happened, we have a clear explanation of what happened. This gives us the false feeling that predicting is something simple.
If it is no longer easy to predict the return of any asset, trying to do so in the short term is an even more arduous task.
However, I will dare to make a prediction here today. But, it will not be for the short term, but for the long term. When I say long term, I mean a period of more than five years.
The table below presents the average annual returns for the main asset classes. These returns are presented in the two columns in two different ways. In the first column there is the real return, that is, the profitability above inflation, measured by the IPCA. The last column shows the nominal return, that is, the return that occurred.
I reinforce that these returns are the annual average of the last ten years. Thus, to know the return on one of the assets in the last ten years, it is necessary to capitalize, that is, add 1, raise it to the tenth power and then subtract 1.
For example, the CDI yielded 122.8% in the last decade (=(1+8.3%)^10-1).
Note that only one asset yielded more than IPCA + 6% per year. The Nasdaq technology stock index has appreciated by the equivalent of IPCA + 9.7% per year in the last decade.
Currently, investors can invest in CDBs, guaranteed by the FGC, yielding more than IPCA + 6% per year. There are also private debt securities, tax-exempt from companies of excellent quality, with equivalent annual returns greater than this yield.
I can bet that five years from now, you’ll regret it if you didn’t take the opportunity now to invest in these bonds with these rates of return.
Michael Viriato is an investment advisor and founding partner of Investor’s House
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I have over 8 years of experience in the news industry. I have worked for various news websites and have also written for a few news agencies. I mostly cover healthcare news, but I am also interested in other topics such as politics, business, and entertainment. In my free time, I enjoy writing fiction and spending time with my family and friends.
