We recently ran across a very interesting survey. What caught our eye on this survey was the large number surveyed, 8550 individuals in over 24 countries, all with at least $100k of investments in Capital Markets.
The second item that caught our eyes, were some of the jaw dropping expectations of these investors. Thankfully, the survey is also given to professional investors and a neat comparison can easily be made!
Natixis Global Individual Investor Survey
The most recent survey found these collective individual investors expecting 13% returns over the next 10 years, ABOVE inflation….or a 14.5% total 10 year average!
We never make guarantee calls, as there are not any…. but we would find it EXTREMELY unlikely to meet these expectations. Not only that, but as you can see from the chart, the returns follow what we call “Rear View Mirror Forecasting” which is using the most recent past to forecast the future … rather than using true forecasting techniques.
Another concern arising from this information is with this expectation a possible under saving for the future and too low of risk expectations that may be inferred with these results.
Comparing the Individual versus the professional expectation of the next 10 years of returns, comes up with a very large variance.
Professional investors are expecting a much more reasonable 5.3% return. Clearly professionals are not using “Rear View Mirror Forecasting”
Individuals expect 13% over inflation for the next 10 years with Professionals expecting 5.3% – while we wish individuals are correct, it’s very unrealistic … Pro’s are likely much more accurate!
We will code this one Forecast and look back in 10 years to see who was closer! Yep a 10 year lookback….
Let the clock start ticking!
Have a Great “Individual versus Pros Expectation” Day!
John A. Kvale CFA, CFP
Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth