Are your investment returns good enough to fund your retirement?
Are your investment returns good enough to fund your retirement? It’s not easy to tell if you have aceved acceptable investment returns for your retirement savings. Let’s say that Audrey’s average annual return – net of fees – over the 10-year period ending Dec. 31, 2023, was 5 per cent. Stella’s return over a five-year period ending in 2023 was 7.5 per cent. Which one got better results from her investment adviser? Well, it depends on how much risk they took. Audrey is risk-averse and had agreed with her adviser 10 years ago to adopt a 25/75 asset mix – 25 per cent in equities and 75 per cent in bonds. For a comparable benchmark fund (described below), the return over 10 years was just 4.5 per cent after fees – this is labelled “conservative” in the chart. Hence, Audrey’s investments outperformed that benchmark by 0.5 per cent a year. Stella was more willing to accept risk and adopted a 75/25 mix. Over the five-year period ending Dec. 31, 2023, this more aggressive benchmark fund