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Investment Returns Reference Tables

Investment return reference tables provide the long-run performance record for major asset classes, allowing investors to evaluate current returns in historical context and to stress-test portfolio assumptions against actual historical sequences. Tables cover annualized returns over different holding periods, rolling 10-year returns, maximum drawdowns, and recovery periods after significant declines.

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Direct Answer

Investment return reference tables document what major asset classes have actually delivered over long periods. The US stock market has historically returned around 10% annually before inflation, but this average conceals wide variation by decade and starting valuation. Including drawdown data, rolling-period returns, and the return sequence from different starting years gives a more complete picture of what an investor should realistically expect over their own holding period.

Common questions

What is the difference between arithmetic and geometric (compound) average return?

The arithmetic average return is the simple average of annual returns: add them up and divide by the number of years. The geometric average (compound annual growth rate, CAGR) is the single annual rate that, if applied consistently, would produce the same ending value as the actual sequence. The geometric return is always lower than the arithmetic return when returns vary. The geometric return is the correct measure for understanding what an investor actually earned over the full period; the arithmetic return is used in some forward-looking estimates.

How does sequence-of-returns risk affect a retirement portfolio?

Sequence-of-returns risk is the risk that the order of investment returns matters as much as the average return. A retiree who withdraws from a portfolio that crashes early in retirement can run out of money even if the long-run average return is the same as a retiree who had a strong early sequence. The early losses reduce the portfolio base from which all future returns are calculated. Historical return sequence tables make this concrete by showing what happened to hypothetical retirees who started withdrawing in different years.

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This guide was written and reviewed by the Swoopr Editorial Team, which researches and maintains Swoopr Investment's educational library.

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