This simulation should be considered for information purposes only, and is based on constant linear hypothesis, as, for example, average annualized returns and inflation. On short, medium and even long term periods, the market performances and inflation rate can strongly differ from these averages and encounter high volatility. Find out more
In this simulator, we have set and used an allocation between stocks and bonds for each risk profile. 30/70 for a conservative profile, 60/40 for a balanced profile, 80/20 for a growth profile and 100/0 for a strong growth profile.
In the simulator we have replaced the historical yearly average return of bonds by the average of the 10-year OLO rates on 1st January of the current year. The 10-year OLO rates are regularly used as an indicator of the current level of bond rates.
(1) Average of the 10-year OLO rates on January 1st of each year (04/01/2017): 0.73%
(2) (3) The average annualized return before inflation is of 8.15% between 1900 and 2016, corresponds to the real average annualized return of shares after inflation (on the basis of US inflation) between 1900 and 2016: 5.10%, and to the average US inflation between 1900 and 2016: 2.90%
The real average annualized return after inflation of 5.1% from 1900 to 2016, used to determine the average annualized return of shares before inflation in our simulation is based on the "World globally diversified" section of the following source: Elroy Dimson, Paul Marsh and Mike Staunton, Credit Suisse Global Investment Returns Yearbook 2017 - http://publications.credit-suisse.com/tasks/render/file/index.cfm?fileid=80603618-9230-382D-C51FF70FAF7A4A65 The simulator is a TreeTop initiative where Elroy Dimson, Paul Marsh and Mike Staunton are not involved.
Past performance is no guarantee of future performance.