As noted at the beginning of the year the economic fundamentals looked sound suggesting good returns were likely, and it turned out that way.

Both 2016 and 2017 produced strong returns.

As usual there was variation along the way with weaker periods such as the third quarter last year, but markets have moved ahead since and still look sound.

For the year diversified investment portfolios with up to 70 per cent growth assets earned 12.1 per cent on average according to research firm Lonsec.

So investors with the popular selection of around two thirds growth assets and one third defensive would have earned close to that.

This is also the investment mix of many default super funds so workers who have not chosen an investment option are often in this type of fund.

Super fund returns would be a little less due to the 15 per cent tax the funds pay on earnings.

Lonsec says conservative investment portfolios with up to 30 per cent growth assets earned only 4.9 per cent in 2017 so investors who held more cash and fixed interest certainly saw low interest rates retard their results.

Returns from most investment sectors other than fixed interest have been high.

Australian shares as measured by the All Ordinaries Accumulation Index, which includes dividends, returned 12.5 per cent, though returns from the different market sectors varied greatly.

The 20 largest companies which includes the four big banks and Telstra only earned 7.3 per cent while the Small Ordinaries Index of small company shares nearly tripled that with 20.0 per cent.

The banks had a difficult year and that will continue with the Royal Commission.

Mining company shares had an excellent year earning 25.8 per cent while the telecom sector dominated by Telstra lost 20.7 per cent as it was sold off due to its NBN issues and reduced profit and dividend forecast.

Property funds traded on the share market had a slower year with 6.4 per cent average return while unlisted commercial property made 12.9 per cent.

Global shares outperformed Australian shares once again with the MSCI World Index returning 15.5 per cent, 3 per cent ahead of the All Ordinaries.

Global infrastructure earned 15.4 per cent.

Investors who chose to keep their money at call earned around 1.75 per cent while those using government and corporate bonds did better averaging 3.7 per cent.

Even though most sectors did well last year they often vary greatly, so it is best to diversify.

That includes having at least a small exposure to defensive assets such as fixed interest and cash.

It’s always better to be safe than sorry.