Average return % on Pension & ISA's

bjarvis2785

Hi all,

A quick, hopefully simple, question.
I'm currently making a spreadsheet to help me out with some forecasting etc and i was wondering if anybody could advise on what an 'average' return would be on a pension fund and also an S&S ISA - say over the last 10-15 years?

I'm essentially looking for what % return i can look to base my forecasts on?

Thanks

dunstonh

Pensions and ISAs share very similar investment options. So, both have nearly 30,000 conventional investment options open to them (and near infinite variation). That does not include mirror funds or legacy funds no longer available for new investors.

So, to answer your question, there is no average return as the differences are so great.

I'm essentially looking for what % return i can look to base my forecasts on?

Its subjective and should be based on your asset class and your personal opinion. If after charges and before inflation, then you could use 2.5% for cautious (with 2.5% for inflation wiping it to zero). You can increase that figure for risk and asset class as you see fit.

PaddyLondon

Try using the Monte Carlo tool on Flexibleretirementplanner.com for your planning

If you then look at the detailed paramaters within it (ie the assumptions) you will see what they believe are appropriate for cautious, aggressive etc.

It's a fascinating tool, and hope you find it as insightful as I have done

IronWolf

I looked into this recently, I think I read somewhere the average was 4-5% which is pretty dire, but a decent return to use in forecasting.

bjarvis2785

Thanks all for the replies... i've currently based my forecasts on 5%. so not a million miles away from IronWolf's suggestion...
Although, i haven't taken in to account inflation/charges etc as per dunstonh's post...

I'm super new to the world of personal finance, so was hoping my spreadsheet will give me some kind of indication on future savings etc. But nothing's ever easy is it

DiamondLil

bjarvis2785 wrote: »

I'm super new to the world of personal finance, so was hoping my spreadsheet will give me some kind of indication on future savings etc. But nothing's ever easy is it

(Sigh) Wish that it were.... I'd be sunning myself on my yacht instead of on here trying to save a bob or two.....

Your_Hero

Wouldn't it depend on what funds/investments you use? a Pension and an ISA are just a "wrap" around whatever you have inside.

If you compared like for like, i.e. exactly the same funds in a pension vs an ISA, the pension would win hands down because of the gross roll up due to generous tax-relief (up to 45%).

See here for a nice summary:
http://seer-green.com/blog/2013-11-21-pensions-vs-isas