Ever wonder what to enter for the rate of return in those calculators that tell you what you will have accumulated after 40 years of saving and investing? It doesn't take a genius to understand that you can't just will a certain number to happen. Even extrapolating the past returns can be chancy - who says the future will be like the past and how many years of the past do you take?
Here are some forecasts whose credibility you can judge for yourself.
The US Social Security Administration's Chief Actuary Stephen Goss
Presented at the 2005 National Academy of Social Insurance Conference
Portfolio Solutions LLC (Richard Ferri) 30 Year Market Forecast
Canada Pension Plan Chief Actuary Jean Claude Menard
Presentation on Projecting Diversified Investments at the same Social Security Conference
I find it interesting that the forecasted returns on Canadian equity are lower than both US and other foreign countries. Is that Canadian reticence or a reflection of a country in the wrong economic sectors, like commodities, or just bad economic management? Whatever the reason, if accurate, it reinforces the need for Canadian investors to diversify internationally.