From Bogleheads
Historic Returns
source: [1] historic (nominal) returns 1926-2005, source: Ibbotson Associates
| Series
| Geometric Mean
| Arithmetic Mean
| Standard Deviation
|
| Large Company Stocks | 10.4% | 12.3% | 20.2%
|
| Small Company Stocks | 12.6% | 17.4% | 32.9%
|
| Long-term Corporate Bonds | 5.9% | 6.2% | 8.5%
|
| Long-term Government Bonds | 5.3% | 5.5% | 5.7%
|
| U.S. Treasury Bills | 3.7% | 3.8% | 3.1%
|
| Inflation | 3.0% | 3.1% | 4.3%
|
Expected Future Returns
source: [2] The Four Pillars of Investing
| Asset Class
| Expected Real Return
|
| Large U.S. Stocks | 3.5%
|
| Large Foreign Stocks | 4%
|
| Large Value Stocks (foreign and domestic) | 5%
|
| Small Stocks (foreign and domestic) | 5%
|
| Small Value Stocks (foreign and domestic) | 7%
|
| Emerging Market / Pacific Rim Stocks | 6%
|
| REITs | 5%
|
| High-Yield ("Junk") Bonds | 5%
|
| Investment-Grade Corporate Bonds; TIPS | 3.5%
|
| Treasury Bills and Notes | 0-2%
|
| Precious Metals Equity | 3%
|
Author of All About Asset Allocation
source: [3] Portfolios Solutions
| Asset
| Real Returns
| With 3% Inflation
| Risk
|
| Government Backed Fixed Income
|
| US Treasury Bills (1 year maturity) | 0.5 | 3.5 | 1.5
|
| Intermediate-term US Treasury Notes | 1.5 | 4.5 | 4.8
|
| Long-term US Treasury Bonds | 2.0 | 5.0 | 5.3
|
| GNMA Mortgages | 2.0 | 5.0 | 8.0
|
| Intermediate Tax-free (AA Rated) | 1.0 | 4.0 | 5.0
|
| Corporate and Emerging Market Fixed
|
| Intermediate High Grade Corporate | 2.0 | 5.0 | 5.5
|
| Long-term Investment Grade Bonds | 2.8 | 5.8 | 8.5
|
| Preferred Stocks (Rated A or better) | 3.5 | 6.5 | 9.0
|
| High Yield Corporate (B to BB) | 4.0 | 7.0 | 15.0
|
| Emerging Market Bonds | 4.0 | 7.0 | 15.0
|
| US Equity
|
| US Large Stocks | 5.0 | 8.0 | 15.0
|
| US Small Cap Stocks | 6.0 | 9.0 | 20.0
|
| US Small Value Stocks | 7.0 | 10.0 | 22.0
|
| REITs (Real Estate Investment Trusts) | 5.0 | 8.0 | 14.0
|
| International Equity
|
| International Developed Country Stocks | 5.0 | 8.0 | 17.0
|
| International Small Country Stocks | 6.0 | 9.0 | 22.0
|
| International Emerging Country Stocks | 7.0 | 10.0 | 25.0
|
| Gross Domestic Product | 3.5 | 6.5 | 2.0
|
References
- ↑ A Random Walk Down Wall Street - Burton Malkiel (2007), page 185 (source: Ibbotson Associates)
- ↑
The Four Pillars of Investing - William Bernstein (2002), page 72
- ↑ 30 Year Market Forecast - Portfolios Solutions LLC (2006). Reprinted with permission from Rick Ferri, CEO, Portfolio Solutions
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Please see [url=http://www.bogleheads.org/wiki/Historical_and_Expected_Returns]Historical and Expected Returns[/url] on the [url=http://www.bogleheads.org/wiki/Main_Page]Bogleheads Wiki[/url].
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