What's a good minimum annual to work from?

Hi all,

So I'm trying to do some projections on growth using regular contributions over a different number of years. What do you think would be a good average annual return to consider over an entire portfolio (of managed funds and direct shares)?

I was thinking 12% - obviously we're in a boom at the moment so at the moment the figure isn't that unique. However if we get a recession and the share market slumps for a while, what type of annual returns would you expect to get then?

Thanks in advance!

 

Hi Samaka,

I would say 10% to be conservative on the numbers personally but others may think this is too low.

Cheers,

Dan

 

Interesting Q

I would use 50yr averages for ASX equities which is around the 12% mark if memory serves, knock a few points of this for fund damadgement and lower returning vehicles added to the mix, so I agree with the 10% figure, that seems like a good place to start.

 

Samaka,

How long is a piece of string ?.
MFs you hold may/will decrease your overall return, but in case of direct share ownership, if you do have a trading/investing method, good money management and discipline you may be able to outperform the All Ordinaries Index, which means you will outperform all/most the fund managers in Australia.

 

As usual, Tropo is right on the money. I personally don't use one single % return for projections - I use a few. For eg: I look at 0%, 7%, 10%, 12% and 15%. I don't really go any higher than that, but that's just my personal preference and it gives me an idea of what is achieveable using a number of different variables.

I don't have any reason for using these numbers either, I just do.

Mark