Investors often have expectations of real annual returns greater than 7 percent — the areas in green. But over 20 years or longer, rates that high are rare. After 60 or 70 years, returns are relatively stable, but this time frame is longer than the relevant horizon for many retirement plans. An example If you invested money at the end of 1930 and withdrew it in 1950, the stock market would have returned about 2 percent a year after inflation and taxes. People who invested after the crash in 1929 in hopes of a quick rebound had to wait many years for their investments to pay off.
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