It Is Reasonable To Expect 8-12% Market Returns Over The Next Ten Years

The title of this blog is indeed a solid myth.

Before I project asset growth and income flow in Retirement Analyzer I have analyzed the client’s current portfolio and compared it to my recommended allocation.  To their disappointment, I routinely reduce the assumed rate of return (ROR) by half while keeping the same volatility.  So, for example, if your historical performance has averaged 15% and volatility (annual range of increases and decreases) has been 20%, I will project 7.5% and keep the standard deviation at 20%.

Why?  Because there is simply too much of nearly every kind of debt for double digit returns to be sustainable:

  • Government debt & government enabled debt (such as mortgage guarantees & bailouts of large public and private institutions).
  • Environmental debt (i.e. we have yet to understand or suffer the costs of our profligate resource exploitation, a massive debt with which we’ve saddled future generations.)
  • Social debt- recompense for the gradual but massive erosion and outright theft of wealth and resources from the rest of the world.
  • Psychological debt- the current and deferred costs of our toxic culture and economy which will eventually transform our consumption patterns (read- dramatic reductions).

Everything I read leads to this.  And finally, a very large and well-respected firm, Vanguard, confirms my use of cynical RORs with their prediction that the highest average return of the typically highest ROR sector will be 7.5%.  over the next ten years.  Here is their latest forecast as of 6/25/2021.

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