Return Benchmarks. What’s Good.

Long-run nominal returns (rough anchors)

• US stocks (S&P 500) — ~10% nominal, ~7% real. The standard benchmark.
• International developed stocks — ~7–8% nominal historically. Currency-adjusted.
• US bonds (10-yr Treasury) — ~4–5% nominal long-run; closer to 2% real.
• Corporate bonds (investment grade) — ~5–6% nominal, compensating for default risk.
• Residential real estate — ~1% real appreciation; 4–8% return with leverage + rent.
• REITs — ~9–10% nominal long-run. Stock-like volatility, real-estate exposure.
• Cash / savings — tracks short-term rates; 0–5% nominal, usually negative real.
• Gold — ~0–1% real long-run. Volatility with little trend.

Real vs nominal

Inflation compounds too. A 7% nominal return in 3% inflation is a 3.9% real return (Fisher: (1+0.07)/(1+0.03) - 1). For anything longer than a few years, real returns are what you should be thinking about — they’re what the portfolio will actually buy you.

Benchmarking by portfolio mix

A 100% stock portfolio’s scoreboard is the S&P 500 (or a global equity index). A 60/40 portfolio’s scoreboard is a 60/40 blend — historically ~7–8% nominal, not 10%. If you’re earning 7% on a 60/40 portfolio in a good year, you’re at benchmark. Comparing to 100% stocks will make any risk-reduced portfolio look like it’s underperforming, when really it’s doing exactly what you set it up to do.

What fees do to the scoreboard

A 1% annual expense ratio compounds into ~22% less wealth over 25 years vs a 0% fee (assuming 7% gross). Two funds in the same asset class with the same strategy will diverge purely because of fees. This is why index funds at 0.03% expense ratios beat actively managed funds at 1% on average — it’s a fee gap, not necessarily a stock-picking gap.