Investor Expectations Are Too Damn High

The Schroders Global Investor Study was just released for 2017. Globally, investors expect a 10.2% annual return over the next five years. For millennials, it’s even higher at 11.7% per year.

That’s possible but unlikely, especially because it’s a projection for a broad investment portfolio, not just stocks. The historic annual returns of stocks, the best performing asset class, don’t even reach that 10% figure.

We’ll reiterate that given where starting valuations are today for stocks and bonds, a 4-5% expected annual return for the next 5-10 years is a more reasonable assumption and is less likely to lead to disappointment.

Source: David Brett at Schroders