9.8%.
That’s the average annual return of the S&P 500 over the last 90 years.
Is that the return you should expect to get in your portfolio? Yes, but only if you have 90 years to invest.
Personally, I don’t have that long.
But I’ve got 20 years.
So should I expect 9.8% average annual return over 20 years?
No.
Remember from last week that the best annualized return over 20 years was 20% and the worst was 6.5%.
That means over the next 20 years it’s very reasonable to expect an average annual return somewhere between 6.5% and 20%.
But the longer you are invested, the more that gap will close in on 9.8%.
And diversification will also shrink that gap. More on that next week.
Disclaimer: The performance numbers reflect an investment in only the S&P 500 and should not be considered investment advice. Please consult your financial professional before investing. Past performance is no guarantee of future results.
