It’s something you’ll hear in your entry level courses in finance or investing: On average, stocks return about 10% per year and bonds return about 5%.
Vanguard recently tweeted this scatterplot charting annual stock and bond returns since 1926. The gold bar covers average stock market returns and the silver bar covers average bond market returns.
@Vanguard_FA“Since 1926, the average annual return for US stocks has been a little more than 10%, and this seems to be pretty common knowledge for even neophyte investors,” Vanguard analyst Donald Bennyhoff wrote. “So 10% would seem to be a reasonable expectation for an average year, right? Our illustration … shows how often that assumption is erroneous, but it is also irrelevant.”
Again, just get it out of your head that a year may turn out to be an average year.
NOW WATCH: Why Chinese executives keep disappearing