Ever since I’ve been investing, nigh on six years now, the general sentiment has been that stocks are the key to long-term growth. Investing in the stock market is risky, but bumps even out over long periods of time resulting in close to double-digit annual growth. Young people like myself (six years ago) should invest as much as possible in a broad stock market index and wait several decades for results.
Allan Sloan from Fortune Magazine is warning that the high returns that have been typical for long-term investors in the stock market over the past generation should not be expected to continue in the upcoming decades.
Barring a miracle – or the creation of a New Math of the market variety – there’s no way we’ll ever see a bull market along the lines of what so many of us grew up with. During that enchanted period, the boring old S&P returned more than 19% a year. When you include compounding, your money more than doubled every four years. Pretty slick.
That was more than twice what stocks earned in the previous 56 years, when they returned about 9%. More than half of that was from dividends, which were almost triple their current level.
I’ll be satisfied with a 9% return on the money I invest for retirement.
Don’t expect another bull market [Fortune Magazine]