In baseball, you don’t always hit a homerun. Honestly, if you get on base just once out of three times, giving you a 0.333-batting average, you’re doing pretty good. Investing is a lot like baseball – or softball, whichever you prefer. Some years you may knock it out of the park and have double digit returns and other years, you’re going to be lucky just to stay out of the red. So, what rate of return should you be swinging for when it comes to your investments? We use, and experts recommend using 6% to 7% a year when planning for your future. The GOAT, Warren Buffet, explains why in a past Bloomberg article. He says, “The economy, as measured by gross domestic product or GDP, can be expected to grow at an annual rate of about 3 percent over the long term, and inflation of 2 percent would push nominal GDP growth to 5 percent. Stocks will probably rise at about that rate and dividend payments will boost total returns to 6 percent to 7 percent.” We, the MO Deferred Comp Plan, tend to use 6% to stay on the conservative side. Now, this does NOT mean you should expect a 6% return every year as some years the market performs better than that, and other years it’s in a slump. The hope is that on average – meaning over the course of your investing career – your investments are a consistent performer and have positive returns that outpace inflation. Think of it this way, in baseball you can have a few bad games and still have a winning season. The same goes for investing. You can have a few underperforming years, and still come out on top in retirement.
