Adjusted for inflation, long term is more like 7%. There have been some really ugly periods where returns were a lot less, however, sometimes lasting more than a decade. For a 30 year timeline, though, it's been a pretty good bet.
Depends on your timeframe. The S&P returned -22% from 1/1/2000 to 1/1/2010, and only +43% from 1/1/2000 to today. The annualized return is nowhere near the 11% quoted in the article.
Not quite true. Early money dwarfs later money in any calculation. But the last 15 years would certainly put a damper on things. Would be nice if the app calculated real interest return for us!
Note that the light red color is actually still indicating a positive real return, this is particularly relevant in the 70s and early 80s when a 2% real return would be a much higher nominal return.
Agreed that some people expect returns for time horizons as short as 10 years though, which is clearly a mistake.
those numbers are on the high side, but yes indeed.
Also all those calculations are completely forgetting that money is a time-sensitive value. If invested wisely, the first $ from 4 years ago would be 1.7$ today if invested into a typical low cost SP500
Picketty's "Capital in the 21st Century" gives ~5% as the historical rate of return of capital after inflation, which is remarkably consistent across countries and decades.
Incorrect, please re-read my statement. An average 10% annual return over 10 years. As the other reply to this notes, history shows in general this rule has held since 1970ish.
In real terms US bills have returned 0.4%/yr over the last 120+ years
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