What Should You Expect?

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.