Experts Predict 6% Stock Returns for Next Decade

Historically stocks have returned 10%…but experts are predicting gains of only 6% in the coming decade. What can you do as a Millennial investor saving for retirement?

I recently came across a few articles that pulled in different U.S. stock market forecasts for the next decade, and the “forecasts” is not warm and sunny, more like cloudy and cool. Over the past 90 years or so the historical long-term averages of stocks have been 10%, while bonds have safely hovered around 5%. However, that is not what the “experts” are predicting.

Now before I give you the experts forecasts I want to explicitly say no one (or one company or firm) can successfully predict future returns in the stock market. It’s impossible. Vanguard founder John Bogle famously said that in his 60+ years in the investment business not once has he met someone who can predict the stock market, nor has he met someone who has met someone who can. That is saying a lot, and is very well put by one of the truly great individuals in the investment business.

While we’re on Vanguard, there 2017 outlook forecasts an annualized stock market return of only 6.6% over the next ten years. They are even less optimistic on bonds, based off historical averages, and only project bonds to annualize at 2.1% over the next ten years. Large asset manager BlackRock is a bit more bearish on the next decade of stocks, forecasting an annualized return of only 5.9%. BlackRock is however a bit more bullish on bonds, forecasting 3.1% returns over the next decade.




What does this mean for a Millennials retirement?

With returns forecasted to be 4% lower than the historical average, this means you’re going to have to tighten up your budget and save more. You don’t necessarily have to invest more aggressively, but you should save more aggressively. For example, as a Millennial if you are saving $500 per month towards retirement and receiving the historical average annualized return of 10%, you would expect to end up with approximately $95,600 after ten years.

However, based off the forecasts from Vanguard and BlackRock noted above, over the next decade you should probably plan on receiving returns of roughly 6% instead. What does this mean for you? If you invested $500 per month but returned annualized gains of only 6% versus 10%, you would end up with approximately $79,000 after ten years. That’s a difference of more than $16,000! If you increased your monthly contributions from $500 to $600, with a 6% return, you would end up with right about $95,000. That $100 monthly increase is fairly large in comparison to what you were saving towards retirement each month, but we Millennials should look at how we can come up with this extra savings each month to keep our retirement on track.


Average Retirement Savings

I was recently reading a study I found on Vanguard where the average amount saved for retirement by age was noted. Granted this study was from 2014, but I still thought it was relatively shocking just how low the numbers were for my Millennial generation, which are individuals born between 1982-2004 and also referred to a “Gen Y” or “Generation Y”. In fact, I sadly think the numbers are very low for all age ranges and generations. This report goes to show that people are simply not saving much for retirement.

I want to bring this back to my Millennial generation and our lack of saving for retirement. I’ve read in other publications that my Millennial generation is known to be savers, much more so than Generation X or Baby Boomers. But this study from Vanguard disputes that on the surface and is based on empirical research, as this study is based on employer retirement plans (and their participants) managed by Vanguard, and amounts reflect the average balance per account. I say on the “surface” because my Millennial generation hasn’t had much time for compound interest to work in our favor like generations 10, 20, 30 years older than us. But these numbers are still very low for Millennials.

Let’s examine the below numbers more closely from a Millennials standpoint. As stated earlier, a Millennial is one who is born between 1982-2004, meaning in the year 2014 when this study by Vanguard was conducted, a Millennial ranged in age from 32-10. Based on this study we’re only examining a small portion of Millennials, those between the ages of 25-32 in 2014. Either way you slice it, the numbers stated below for those age 34 and below are rather low.

Average Retirement Savings by Age

Average retirement savings by age
Source: Vanguard, How America Saves 2014. This study examined employer retirement plans (and their participants) managed by Vanguard. Amounts reflect the average balance per account.

This chart shows average retirement plan account balances by age as of 2014.

  • For people under age 25, the average account balance was $3,865.
  • For people age 25 to age 34, the average account balance was $21,524.
  • For people age 35 to age 44, the average account balance was $54,054.
  • For people age 45 to age 54, the average account balance was $103,269.
  • For people age 55 to age 64, the average account balance was $154,421.
  • For people age 65 and over, the average account balance was $176,696.

Average Retirement Balance for a Millennial?

Millennials, how does your current retirement balance compare to the aforementioned “average” retirement balances Vanguard is reporting on?


Last Week Stock Market (Feb 27-Mar 3, 2017)


Last week, Feb 27-Mar 3, 2017, U.S. stocks increased for the fourth straight week. The Federal Reserve (Fed) have taken note of these positive surprises, and many have stated that a short-term interest rate increase would be appropriate at its next meeting on March 15. And next week light vehicle sales will be released, which should help move the market, whether that be positively or negatively.

Last Week’s Stock and Bond Index Performance (Feb 27-Mar 3, 2017)

  • NASDAQ 0.4% (YTD 9.1%)
  • Dow Jones Industrial Average 0.9% (YTD 6.3%)
  • S&P 500 Index 0.7% (YTD 6.4%)
  • U.S. Aggregate Bond Index -0.8% (YTD 0.3%)

How did my retirement portfolio perform last week (Feb 27-Mar 3, 2017)?

Below is a snapshot of my three biggest retirement portfolio mutual fund movers (and losers!) in terms of percentage gained last week.

The below mutual funds are held within my work 401(k) plan as well as two separate Roth IRA plans. All accounts are held with Vanguard.

  1. Vanguard REIT Index Fund (VGSLX) -1.4%
  2. DFA U.S. Small Cap Value Portfolio (DFSVX) -0.7%
  3. Vanguard S&P 500 Index Fund (VFIAX) 0.7%

Can I Beat the Stock Market?

I am actually not trying to “beat the market” with my retirement portfolio…I am trying to match it. I do have alternative indexes in my retirement portfolio to help possibly beat the market, e.g. Small Cap Value, REITs, International, and Emerging Markets. I am purposely over-weighted in Small Cap Value, which at times helped me beat the market and at the same time lag the market. I am actually considering rebalancing my allocations a bit so I’m not so heavy in Small Cap Value, but I do like its potential. I’ve read countless academic articles about how it has historical beat large cap stock and the S&P 500. I am investing for the long haul so even though I am not beating the market right now, I feel confident about my future earnings/potential.

With that said, if I can beat the market I will absolutely take it (obviously)! In the last 90 days my portfolio is up 5.84%, whereas the S&P 500 is up 8.72%. So I am lagging the market, and this is the first time I am behind in months.

I am a liberal arts major and I am my own financial advisor. My goal with this personal finance blog is to show all Millennial’s that you have the power to take control of your personal finances through self-educating on money and finance, and by striving to become financially literate. That is what I have been doing for years now, focusing on becoming financially literate, so I can one day become financially independent. I’m trying to prove to Millennial’s that we can all do this and thrive with money. Follow my blog as I highlight relevant personal finance topics pertaining to us Millennial’s.


Last Week Stock Market (Feb 20-24, 2017)


Last week, Feb 20-24, 2017, the stock market was once again up. This being the fifth consecutive week the market has been up. The Dow (DJIA) closed at a record high for 11 straight days, which is the longest record streak since January of 1987. Friday the S&P 500 closed at an all-time high. Helping stocks move higher has been a better-than-expected earnings season, as the blended earnings growth rate for the S&P 500 is nearly 5%, and about 66% of companies have reported earnings above analyst estimates. International stocks also rose as better-than-expected manufacturing data was reported in the eurozone.

  • Zillow reports average home values are up 7.2% in past year to $195,300
  • New home sales up 3.7% in January, which is less than expected from economist
  • 24% of American’s have more credit card debt than emergency savings
  • 30-year fixed-rate mortgage up slightly to 4.16% this week from 4.15% last week (one year ago a 30-year fixed-rate was at 3.62%)
  • All-time low for 30-year fixed-rate mortgage was 3.31% back in November 2012 (all-time high for 30-year fixed was 18.63% back in October 1981)
  • The NASDAQ is up 361% from March 9, 2009 low
  • Fidelity Investments reports 55% of American households are at risk of being unprepared to cover essential living expenses in retirement

Last Week’s Stock and Bond Index Performance (Feb 20-24, 2017)

  • NASDAQ 0.1% (YTD 8.6%)
  • Dow Jones Industrial Average 1.0% (YTD 5.4%)
  • S&P 500 Index 0.7% (YTD 5.7%)
  • U.S. Aggregate Bond Index 0.6% (YTD 1.1%)

How did my retirement portfolio perform last week (Feb 20-24, 2017)?

Below is a snapshot of my three biggest retirement portfolio mutual fund movers (and losers!) in terms of percentage gained last week.

The below mutual funds are held within my work 401(k) plan as well as two separate Roth IRA plans. All accounts are held with Vanguard.

  1. Vanguard REIT Index Fund (VGSLX) 2.0%
  2. Vanguard S&P 500 Index Fund (VFIAX) 0.7%
  3. DFA U.S. Small Cap Value Portfolio (DFSVX) -0.7%

Can I Beat the Stock Market?

I am actually not trying to “beat the market” with my retirement portfolio…I am trying to match it. I do have alternative indexes in my retirement portfolio to help possibly beat the market, e.g. Small Cap, REITs, International, and Emerging Markets. With that said, if I can beat the market I will absolutely take it (obviously)! In the last 90 days my portfolio is up 6.07%, whereas the S&P 500 is up 7.52%. So I am just slightly behind the market, and this is the first time I am lagging in months.

I am a liberal arts major and I am my own financial advisor. My goal with this personal finance blog is to show all Millennial’s that you have the power to take control of your personal finances through self-educating on money and finance, and by striving to become financially literate. That is what I have been doing for years now, focusing on becoming financially literate, so I can one day become financially independent. I’m trying to prove to Millennial’s that we can all do this and thrive with money. Follow my blog as I highlight relevant personal finance topics pertaining to us Millennial’s.


Last Week Stock Market (Feb 13-17, 2017)


Last week, Feb 13-17, 2017, the stock market once again closed at record highs on Friday, just as it did last Friday, Feb. 10th. U.S. stocks closed the week up 1.5% and the S&P 500 is up 5.0% year-to-date. Investors continue to be fascinated by possible changes to the U.S. corporate tax code and the regulatory environment. As hopes for policy changes continue to rise, interruptions of these policy changes could cause market instability.

  • The U.S. has dropped on the World Economic Freedom Index from 11 to 17, and is now behind countries like the Netherlands and Lithuania
    • Here are the top 5 countries on the World Economic Freedom Index…
      1. Hong Kong
      2. Singapore
      3. New Zealand
      4. Switzerland
      5. Australia
    • Note: a key component to this index is tax rates, e.g. the lower a counties tax rate the more economic freedom it has
  • A report shows 79% of American’s plan to save their tax refund or use it to pay off debt this year
  • 30-year fixed-rate mortgage drops slightly to 4.15% this week from 4.17% last week (one year ago a 30-year fixed-rate was at 3.65%)
  • All-time low for 30-year fixed-rate mortgage was 3.31% back in November 2012 (all-time high for 30-year fixed was 18.63% back in October 1981)
  • Monthly mortgage payments consume nearly 16% of median income
  • The S&P 500 is up 248% from its March 9, 2009 low
  • Oil is down 0.6% so far this year and down 0.9% this past week (oil is down 63.2% from record high in July 2008)

Last Week’s Stock and Bond Index Performance (Feb 13-17, 2017)

  • NASDAQ 1.8% (YTD 8.5%)
  • Dow Jones Industrial Average 1.7% (YTD 4.4%)
  • S&P 500 Index 1.5% (YTD 5.0%)
  • U.S. Aggregate Bond Index -0.1% (YTD 0.5%)

How did my retirement portfolio perform last week (Feb 13-17, 2017)?

Below is a snapshot of my three biggest retirement portfolio mutual fund movers in terms of percentage gained last week.

The below mutual funds are held within my work 401(k) plan as well as two separate Roth IRA plans. All accounts are held with Vanguard.

  1. Vanguard S&P 500 Index Fund (VFIAX) 1.6%
  2. Vanguard Target Date 2040 Fund (VFORX) 1.1%
  3. Vanguard Extended Market Index Fund (VEXAX) 1.0%

Can I Beat the Stock Market?

I am actually not trying to “beat the market” with my retirement portfolio…I am trying to match it. I do have alternative indexes in my retirement portfolio to help possibly beat the market, e.g. Small Cap, REITs, International, and Emerging Markets. With that said, if I can beat the market I will absolutely take it (obviously)! In the last 90 days my portfolio is up 7.08%, whereas the S&P 500 is up 6.96%. So I am just slightly beating the market.

I am a liberal arts major and I am my own financial advisor. My goal with this personal finance blog is to show all Millennial’s that you have the power to take control of your personal finances through self-educating on money and finance, and by striving to become financially literate. That is what I have been doing for years now, focusing on becoming financially literate, so I can one day become financially independent. I’m trying to prove to Millennial’s that we can all do this and thrive with money. Follow my blog as I highlight relevant personal finance topics pertaining to us Millennial’s.


Last Week Stock Market (Feb 6-10, 2017)


Last week, Feb 6-10, 2017, the Dow (20,269) and the S&P 500 (2,316) closed at record highs on Friday, with both gaining roughly 1% on the week. The increase was late in the week after President Donald Trump said he would announce “something big” on tax reform in the next few weeks. Investors are very optimistic that lower taxes could finally fuel faster economic growth.

  • Consumers spent an average of $88 per day in January, which is down $17 from December (albeit that is inflated due to holiday shopping)
  • 30-year fixed-rate mortgage drops slightly to 4.17% this week from 4.19% last week (one year ago a 30-year fixed-rate was at 3.65%)
  • S&P 500 up 242% from March 9, 2009 low

Last Week’s Stock and Bond Index Performance (Feb 6-10, 2017)

  • NASDAQ 1.2% (YTD 6.2%)
  • Dow Jones Industrial Average 1.0% (YTD 2.6%)
  • S&P 500 Index 0.8% (YTD 3.5%)
  • U.S. Aggregate Bond Index 0.4% (YTD 0.6%)

How did my retirement portfolio perform last week (Feb 6-10, 2017)?

Below is a snapshot of my three biggest retirement portfolio mutual fund movers in terms of percentage gained last week.

The below mutual funds are held within my work 401(k) plan as well as two separate Roth IRA plans. All accounts are held with Vanguard.

  1. Vanguard FTSE Emerging Markets ETF (VWO) 1.6%
  2. Vanguard REIT Index Fund (VGSLX) 1.2%
  3. Vanguard Extended Market Index Fund (VEXAX) 0.9%

I am a liberal arts major and I am my own financial advisor. My goal with this personal finance blog is to show all Millennial’s that you have the power to take control of your personal finances through self-educating on money and finance and striving to become financially literate. That is what I have been doing for years now, focusing on becoming financially literate, so I can one day become financially independent. I’m trying to prove to Millennial’s that we can all do this and thrive with money. Follow my blog as I highlight relevant personal finance topics pertaining to us Millennial’s.


Retirement Contribution Percentage for 32

In January I was able to finally max out my personal Roth IRA ($5,500). This is the first year I’ve had my own Roth IRA and I am extremely happy to report that I was able to max it out. The reason I have not done this before is because I receive a company match and profit sharing plan via my workplace 401(k). So I have managed to save a decent amount already for my retirement, thanks to my company retirement plan, especially their match.

My wife is self-employed and we’ve been contributing to a Roth IRA for her for years. We haven’t always been able to max it out ($5,500) but we’ve have a few times and we’ve been great lately.

For the first time ever this year I decided to crunch all our retirement savings for 2016 to determine exactly what percentage of our income we are contributing to retirement. As a general rule of thumb, most certified financial experts suggest at least 10-15%.

Well I am happy to report that my wife and I managed to save 18% of our income towards retirement. I am extremely happy with that result. My goal is to get closer to 20% though, then begin throwing any extra money towards my mortgage.

Last Week Stock Market (Jan 30-Feb 3, 2017)


Last week, Jan 30-Feb 3, 2017, was a relatively flat and uneventful week. Especially when compared to last week when the Dow hit the historic 20,000 mark for the first time ever. But the NASDAQ closed on Friday at an all time high of 5,666. The stock market was down actually the whole week, save for Friday when it jumped 1%. A strong jobs report Friday aided the last minute jump of the week.

The economy added 227K jobs in January, which was more than expected, hence the Friday market bump. However, the unemployment rate in January raised slightly to 4.8% from 4.7%. And there are still 1.9 million American’s out of work for at least the last 27 weeks. Also, the average hourly earnings rate for January 2017 was up $0.03 to $26.00. Lastly, is that consumer confidence has fallen and is down from a 15-year high.

30-year fixed-rate mortgages remain unchanged this past week at 4.19%. However, one year ago 30-year fixed-rate mortgages were 3.72%. The all-time low for 30-year fixed-rate mortgages is 3.31%, and that was back in November of 2012. In comparison, the all-time high for a 30-year fixed was 18.63%, set back in October 1981. So we Millennials complain about student loan debt and the rapid housing boom in some markets, but lets be thankful our interest rates are historically in our favor.

Last Week’s Stock and Bond Index Performance (Jan 30-Feb 3, 2017)

  • NASDAQ 0.1% (YTD 5.3%)
  • Dow Jones Industrial Average -0.1% (YTD 1.6%)
  • S&P 500 Index 0.1% (YTD 2.6%)
  • U.S. Aggregate Bond Index 0.1% (YTD 0.3%)

How did my retirement portfolio perform last week (Jan 30-Feb 3, 2017)?

Below is a snapshot of my three biggest retirement portfolio mutual fund movers in terms of percentage gained last week.

The below mutual funds are held within my work 401(k) plan as well as two separate Roth IRA plans. All accounts are held with Vanguard.

  1. Vanguard FTSE Emerging Markets ETF (VWO) 0.7%
  2. Vanguard REIT Index Fund (VGSLX) 0.6%
  3. Vanguard Extended Market Index Fund (VEXAX) 0.6%

I am a liberal arts major and I am my own financial advisor. My goal with this personal finance blog is to show all Millennial’s that you have the power to take control of your personal finances through self-educating on money and finance and striving to become financially literate. That is what I have been doing for years now, focusing on becoming financially literate, so I can one day become financially independent. I’m trying to prove to Millennial’s that we can all do this and thrive with money. Follow my blog as I highlight relevant personal finance topics pertaining to us Millennial’s.