What return should I expect from investing?

Nobody can tell you, and anyone stating a precise figure is guessing. Diversified shares have historically returned meaningfully more than inflation over long periods, but with enormous variation between decades. Plan pessimistically — if a plan only works at optimistic returns, it is not a plan, it is a hope.

Why this page will not give you a number

Every projection you have seen — including the 7% used elsewhere on this site as an illustration — is an assumption dressed as arithmetic. The maths is precise. The input is a guess.

Long-run historical returns from diversified share ownership have exceeded inflation by a meaningful margin. That statement is well supported and it is about as far as honesty extends, because:

The variation between decades is enormous. There have been long stretches of excellent returns and long stretches of nearly nothing. Which one you get depends heavily on when you happen to be alive and investing, and that is not a skill.

Past averages are not a mechanism. Nothing enforces the historical average on the next thirty years. It is a description of what happened, not a rule about what will.

Where you look changes the answer. Different countries, periods, indices and inflation measures produce materially different figures. Anyone quoting one number has chosen a dataset, and often chosen it because it flatters the argument.

What to do instead of predicting

Assume less than you hope. Run your plan at a modestly pessimistic return. If it still works, you have a plan with room in it. If it only works at optimistic returns, you have a hope with arithmetic attached.

Check the sensitivity. Run the same plan at two or three different assumptions. What matters is not the central figure but how badly things break when it is wrong. A plan that collapses if returns are two points lower is fragile regardless of how likely that is.

Focus on the inputs you control. You cannot set the return. You can set how much you contribute, how long you leave it, and what you pay in fees. Those three are decided by you, and over long periods they matter at least as much as the market does.

Nominal and real are different questions

Ask specifically about returns after inflation. This is where most quoted figures mislead.

A 7% return with 3% inflation is not 7% of extra purchasing power. It is closer to 4%. Over thirty years the difference between those two figures is not a detail — it is most of the answer.

When planning for something decades away, think in real terms throughout. It is less flattering and considerably more useful.

Then subtract costs

Whatever assumption you use is a gross figure. Your outcome is after fees.

A 7% assumption with 1.5% of total costs is a 5.5% outcome, and over thirty years that gap is enormous — see what fees actually cost. Costs are the one part of this you can know in advance and change today.

The sequence nobody mentions

Two people can experience the same average return over the same period and end up in very different places, depending on the order the good and bad years arrive in.

This matters little while you are contributing. It matters a great deal when you start withdrawing, because a poor stretch early in retirement forces selling more units at low prices, and that damage does not undo itself.

It is a genuine argument for holding some stable money alongside investments once you are drawing on them — not because markets are dangerous, but because the timing of their bad years is not something you get to choose.

The one-line version

Use a modest assumption, check what happens if it is wrong, control your costs and contributions, and treat any confident forecast — including a pessimistic one — as entertainment.