Saving vs investing

tichtich

peter021072 said:

However, projected returns in Global equities (estimated by Vanguard at September 2023 levels) are only 5.4 - 7.4% over 10 years, again not allowing for inflation. Of course this estimate is itself highly speculative.

That estimate is probably based on an assumption of inflation being about 2.5% p.a. over that period, which would make the real return about 4%. Real returns on savings are likely to be much less. Still, I wouldn't be surprised if the gap between equities and risk-free savings/bonds (the risk premium) is significantly lower over the next 10 years than the historical average.

Albermarle

tichtich said:

peter021072 said:

However, projected returns in Global equities (estimated by Vanguard at September 2023 levels) are only 5.4 - 7.4% over 10 years, again not allowing for inflation. Of course this estimate is itself highly speculative.

That estimate is probably based on an assumption of inflation being about 2.5% p.a. over that period, which would make the real return about 4%. Real returns on savings are likely to be much less. Still, I wouldn't be surprised if the gap between equities and risk-free savings/bonds (the risk premium) is significantly lower over the next 10 years than the historical average.

At the start of this decade, there were many comments/posts on here that it was expected this decade would not be as lucrative as the last decade. Simply because the last decade was so lucrative for investors, it was unlikely to be repeated.
So far this has been rather true, but that in itself may indicate the worst is behind us and we have got the bad bit of the decade out of the way.
Plus savings rates are very likely to come slowly down.

All idle speculation of course.

Hoenir

Albermarle said:

tichtich said:

peter021072 said:

However, projected returns in Global equities (estimated by Vanguard at September 2023 levels) are only 5.4 - 7.4% over 10 years, again not allowing for inflation. Of course this estimate is itself highly speculative.

That estimate is probably based on an assumption of inflation being about 2.5% p.a. over that period, which would make the real return about 4%. Real returns on savings are likely to be much less. Still, I wouldn't be surprised if the gap between equities and risk-free savings/bonds (the risk premium) is significantly lower over the next 10 years than the historical average.

At the start of this decade, there were many comments/posts on here that it was expected this decade would not be as lucrative as the last decade. Simply because the last decade was so lucrative for investors, it was unlikely to be repeated.
So far this has been rather true, but that in itself may indicate the worst is behind us and we have got the bad bit of the decade out of the way.
Plus savings rates are very likely to come slowly down.

All idle speculation of course.

QT will be with us for a decade.