What is the long-term average return of the stock market?
It depends! The last 100 years, the last 50, the most recent 10 years?
Most studies point to roughly a 10% average return. This includes dividends. 10% sounds pretty good, but remember to factor in the rate of inflation, as well as knowing what the risk-free rate of return has been.
The risk-free rate of return is usually measured by looking at the T-Bill (U.S. Treasuries) Rate. The 10-year is currently ~3.10%. Rates are inverted (a bearish sign), the 5-year is above 3.25% So stocks returning anything over whichever rate you use is considered good.
Most measurements of inflation in the US are notoriously low. Inflation now measured at ~9%, would be closer to 11.5% if the government didn’t change the weight of components as they did many years ago.
So over the long term, stocks outperform putting your money into something risk free. If you can sleep at night when stock prices rise or fall 2% to 3% per day, stick with more of your assets in the stock market. Good luck. mk
https://www.quora.com/profile/Marty-Kearney-5
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- LalaLand·2022-09-03Thank you for your insights. Inflation is one of the most important factor to consider in investing.4Report
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- Road1Warrior·2022-09-0110 is good3Report
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