R100 in 1940, R10 million by 2025: the investment risk no spreadsheet captures
By Steven Nathan*
R100 invested in the JSE at the start of 1940, with dividends reinvested, would have grown to about R10.7 million by the end of 2025. The same R100 invested in the S&P 500 grew to almost R34 million. The arithmetic is compelling, but it hides the risk that does the most damage to a family's long-term wealth.
For those who like the numbers, the JSE returned 14.4% a year in rand from 1940 to 2025, or 7.1% after SA inflation. The S&P 500 returned 11.3% a year in dollars, or 7.3% after US inflation. In their home currencies, the two markets created real wealth at a remarkably similar pace.
For South African investors, the crucial difference has been the rand. It weakened by about 4% a year against the dollar over the period, lifting the S&P 500's return to about 16% a year in rand, against 14.4% for the JSE. Offshore investing also offers far more choice: industries scarcely represented on the JSE, alongside a broader mix of economies and currencies that reduces a family's dependence on one country.
None of those returns came in a straight line. In their worst calendar years, the JSE fell 26% in rand and the S&P 500 fell 37% in dollars. This is why we do not define risk as volatility, the year-to-year movement the industry usually quotes. For capital invested for decades, those movements are unavoidable and irrelevant. The more important risk is a poor outcome when you need the money.
Time helps to reduce that risk. Over a single year, the JSE and S&P 500 lost money in roughly one year in four. Over every ten-year period, the JSE made money in rand. Over twenty years, neither market recorded a loss in its home currency, and even the weakest twenty-year stretches still compounded at more than 5% a year.
The risk no spreadsheet captures is behavioural. Selling near the bottom turns a temporary decline into a permanent loss, and it is among the most expensive mistakes an investor can make. People who have built a business often find this especially difficult. In a company, the instinct to act quickly when things go wrong can save the day. In a portfolio, it can do the opposite.
Daily financial news makes the temptation harder to resist. It feels informative, but it is designed to hold attention, so every market move is made to seem meaningful and every week a moment to act. For a family investing over decades, that noise is more likely to be harmful than helpful. Long-term wealth comes from a sound plan and the discipline to follow it.
The greater danger is discovering, only when a severe fall arrives, that the portfolio carries more risk than the family can live with. At Centric, we have that conversation in calm markets. We advise holding enough defensive assets to cover up to five years of family spending, so growth assets need not be sold during a crisis. We also record the family's goals, time horizons and tolerance for loss in a written Investment Policy Statement.
When markets are difficult, decisions can then follow a plan made together in calm conditions. That plan also gives the next generation a clear framework when the person who built the wealth is no longer the one steering it.
The best time to agree your plan is before markets test it. If you would like to understand how your family's wealth would hold up in a severe market fall, I would be glad to arrange a confidential Family Wealth Review.
*Steven Nathan CA(SA), CFA Founder, Centric Family Office & SWAN Wealth Management. Former Managing Director, Deutsche Bank, and founder of 10X Investments.
Centric Family Office is a juristic representative of Centric Wealth Advisory (Pty) Ltd – FSP 47766.
Figures are historical total returns, 1940 to 2025, and are not a guide to future returns. Sources: Dimson, Marsh & Staunton; JSE; Stats SA; Robert Shiller; Aswath Damodaran