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Shares offer potential for best return

ORDINARY shares have outperformed all other investment sectors over the past ten years, according to an investment sector performance report for the Australian Stock Exchange by Towers Perrin.

At the lower marginal tax rate, currently 21.5 per cent, the after-tax return of ordinary shares was 10.8 per cent per annum.

Fixed interest (10.2 per cent), property (6.1 per cent) and cash (6.0 per cent) were also well above inflation at 2.9 per cent per annum.

At the top marginal tax rate, currently 48.5 per cent, the after-tax returns from shares were well above inflation.

Returns from fixed interest were strong, while property and cash investments were more modest.

The ASX commissioned Towers Perrin to compare the performance of four major sectors; Australian equities, residential property, domestic fixed interest and domestic cash.

Towers Perrin found that at the top marginal tax rate the effective tax rate for shares is around 28 per cent thanks to the benefits of dividend imputations.

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