Real Returns

This is an older post but I had a reader asking about a similar topic so I thought I would repost…

Here are some long term charts based on the data from Morningstar / Dimson Marsh Staunton.

Below are the best, middle, and worst case scenarios for the main asset classes of sixteen countries from 1900-2011.  All are real return series on a log graph (except the last one).

First, here are the best cases for returns on your cash.  This chart goes to show that leaving cash under your mattress is a slow bleed for a portfolio.  I excluded Germany after the first series as it dominates the worst case scenarios (in this case hyperinflation).

 

Best Case:  -2.30% per year

Middle:  -4.10%

Worst Case:  -100%

 

 

Next up is real returns for short term bills.

Best Case:  2.25% per year

Middle:  0.71%

Worst Case:  -3.63%

(Real Worst Case, Germany -100%)

 

Followed by the real returns for longer dated bonds.

Best Case:  3.04% per year

Middle:  1.40%

Worst Case:  -1.91%

(Real Worst Case, Germany -100%)

 

And finally, the real returns for equities.

Best Case: 7.43% per year

Middle:  4.60%

Worst Case:  2.00%

 (Real Worst Case, China, Russia -100%)

And the same chart presented non-log…

 

 
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