The stock market will give you a 10% annual return. Money Tips #5
Posted on Tuesday, August 18, 2009 at 12:41 am
This is a fuzzy interpretation of the famous Ibbotson-Sinquefield stock market study, research that showed the stocks deliver an annualized average return of 10%. The problem is that purchase viagra Roger Ibbotson, the guy behind the study, now says that he expects the next 25 years to be different from the past 75, with returns closer to 8%.
Moreover, the 10% number includes several assumptions, such as a long time horizon, no active trading, no taxes and no transaction costs. That’s hardly the real world.
Also, many people forget that the historical returns are an average, not an annual total. When people live by this rule and make it their expectation, they tend to be disappointed, which makes it tough to stick to an investment strategy.
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