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I've heard the number 7% thrown around a bunch of times, but I am struggling to find reputable data to back it up.

All I found was a quote from Warren Buffet that I couldn't find an original source for and data assembled by individuals on their personal websites. Is there something from an organization such as Market Watch making a statement about this?

I'm hoping to specifically find what the 10 or 20 year return is for investing in the S&P 500 index fund or another diversified portfolio option.

  • 2
    Have you tried looking at index funds that have existed for a long period of time to see what their average returns are? – mhoran_psprep Mar 22 '17 at 10:35
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    Just remember that past performance doesn't predict future results. – Nathan L Mar 22 '17 at 14:22
  • In the UK, the marketing material issued some finance companies (e.g. life insurance) is heavily regulated. The good news is that it prevents the companies cherry-picking the data they use, but the bad news is that every company uses the same arbitrary (and not particularly accurate) assumptions. So those particular "original sources" are worthless. US regulations may be different, of course. – alephzero Mar 22 '17 at 14:43
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The oddly named MoneyChimp offers a great look at the numbers for the S&P.

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You can enter a date as early as 1871 and any ending date you wish. The last 100 years did, in fact, show a CAGR of 10.06%. Take off a bit, .05 - .10 for expenses if you want to see the return for an ETF or mutual fund.

1

One way would be to take 1st March 2017 S&P 500 index value at close and take 1st March 2007 S&P 500 index value at close and calculate CAGR. Once such calculator is here. However, this will not be the exactly same as the returns of index funds for this period, since index funds can be managed passively or actively. For specific funds you probably have to look at the CAGR for the period for that fund.

Hope this helps

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    Make sure you account for dividends in the source where you get your numbers, otherwise your calculation will be 'leaking' returns that an investor would have realized if they held shares over that period. – Grade 'Eh' Bacon Mar 22 '17 at 13:32

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