Returns for investing in STI index for the past 10 years

In an earlier post, I did some backtesting to find out the estimated returns of investing in the STI ETF once every 6 months.

In order to "simulate" an even more real life scenario, I backtested the returns of investing in the SPDR STI ETF through "POSB Invest-Saver", an monthly investment plan with the option to invest in Nikko AM STI ETF or ABF Singapore Bond Index Fund. This is the most cost efficient option for someone who invests in small amount monthly, e.g. $100.

The reason for using SPDR STI ETF is because it has a 10 year history data to work with (Nikko AM STI ETF was introduced in 2008). I used price data from Jan 2005 to Dec 2014, and investment was made roughly once every 4 weeks.

Results

With $100 monthly investment, an internal rate of return (IRR) of 6.4% was achieved. Let's not forget in this 10 year period, the 2nd worst global financial crisis in history happened in 2008, and also the rather serious European crisis in 2011.

Total Cash Outlay	$12,906.69
Portfolio Value (+dividends collected)	$17,387.56
ROI	34.72%
IRR	6.43%

The backtest spreadsheet can be found here.

With a 10-year track record (and numerous historical studies highlighting the long-term growth of equity markets worldwide), I think the risk of making meagre returns or loss by investing in stock indices is quite slim. Of course, future performance is not guaranteed, and this is the inherent risk in investing.

P.S. If one is still not persuaded by the returns of this investing method,  perhaps one could consider alternatives like this or this that give returns of 20% annually, a year or two of holding period, with the returns "guaranteed".