Quote:
Originally posted by Yakk
Don't be unreasonable. The best long-term after-inflation returns I've seen from "generic" investment strategies are in the 3-5% range. And if you aren't playing with inflation-adjusted dollars, you are cheating.
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I'm not being unreasonable.
Starting from the 1930's, inflation has average roughly 3% annually.
http://inflationdata.com/inflation/I...eInflation.asp
Also note the performance of the US market, here benchmarked against US inflation. This graph runs from 1925 through 1995
Here's another interesting link.
http://www.paritech.com/paritech-sit...on/Lesson2.asp
For more recent data, here's the average return of the Dow, from 1970 - 1999, which averages over 13%.
http://www.finfacts.com/stockperf.htm
Also, at the bottom of the page here, it shows the 70 year average of the DJIA from 1926-1996 to be right at 10%.
http://www.investorhome.com/history.htm
So, based on the historical data of even just the DJIA, a return of 10% annually less inflation of 3% gets you a return of roughly 7%, which if you plan on being more aggressive than the DJIA leads to a not unreasonable return of 8%.