Investment Returns: What to Realistically Expect

When you open an investment calculator, the first question is: what return rate should I use? This article surveys historical data across asset classes so you can pick a realistic number. 01. US stocks: the long-run average The S&P 500 has returned ~10% nominally since 1926, or ~7% after inflation. But averages hide volatility: -37% (2008) to +52% (1954). The 10% figure materializes only over 15–20+ year horizons. For planning: use 7% (inflation-adjusted) or 10% (nominal) for diversified US equity. 02. Bonds and fixed income US government bonds: 5–6% nominal (2–3% real) historically. Corporate bonds add 1–2% credit spread. Current investment-grade yields: 4–5%. Bonds stabilize, not grow. Use 3–5% nominal for bond allocations. 03. Savings accounts and CDs Current high-yield: 4–5% APY (historically unusual). 20-year average: 1–2%. For 10+ year projections, use 2–3%. Savings rarely beat inflation long-term — they're for emergencies, not wealth building. 04. What to plug into the calculator Balanced 60/40: 6–7% nominal. Aggressive 90% stocks: 8–9%. Conservative 30/70: 4–5%. Always run optimistic and pessimistic scenarios. Takeaway: Use 7% for long-term stock projections in today's dollars, 4–5% for balanced portfolios. Always account for inflation.