An Investor’s Guide to Expected Returns

Will I have enough money to retire comfortably?

Will I have enough money to retire comfortably? Am I on track? Should I be saving more? These are the types of questions clients bring to us daily. We turn to financial planning and modelling into the future using expected returns to answer them.

Expected returns estimate the average return that an investment or portfolio should generate over time. Being able to create realistic projections requires starting with appropriately developed expected returns.

In this episode, Marcelo and Keith talk about how investors and advisors should use expected returns, what you need to know about how they’re determined, why they’re essential for retirement projections, the organizations that create expected returns, and so much more!

Financial Planning and Investment Success

• What are expected returns? (3:17)
• The relationship between valuations and expected returns (4:33)
• How financial advisors use the Projection Assumption Guidelines from FP Canada™ and the IQPF (6:35)
• Expected returns for different asset classes according to the 2023 Projection Assumption Guidelines (8:09)
• What the reports from firms like Vanguard say about expected returns (9:52)
• How we use expected returns in financial planning (11:20)
• A side-by-side comparison of current returns and historical returns (14:11)
• Real returns of stocks over the last 120 years (16:37)
• What you can do to improve the odds of a successful planning and investment experience (21:21)
• How management fees have changed over time (23:20)
• Why we’re optimistic about the future (27:10)
• And much more!

Mentioned in this Episode:

• 2023 Projection Assumption Guidelines
• Elroy Dimson, Paul Marsh & Mike Staunton’s Book | Triumph of the Optimists: 101 Years of Global Investment Returns
• Tulett, Matthews & Associates
• Keith Matthews’ Book | The Empowered Investor: A Guide to Building Better Portfolios