A huge red flag when I’m talking to potential new clients is when they are upset at their current advisor about their returns. Especially when I hear things like, “I’ve been with this guy 2 whole years and haven’t made any money.”
Two years? That’s a blip in time in an investor’s return history. As an advisor, I know that unlucky timing starting with a new advisor is probably more to blame for disappointing returns than bad investment decisions (mostly).
To remind you what long term returns are versus what a bad year can look like, here is a handy chart:
|
Index Name |
30-year average rate of return | 10-year average rate of return | Worst year in the last 10 years |
| S&P 500 (1993 – 2023)
US Large Companies |
12% | 16% | -18% in 2022 |
| Bloomberg Aggregate Bond Index (1991 – 2021)
US Investment Grade Bonds |
6% | 3.5% | -13% in 2022 |
| MSCI EAFE Index (1994 – 2024)
International developed market stocks |
4.7% | 5.4% | -14% in 2022 |
What am I trying to say here? Patience, perspective, and understanding the reason why you are in a portfolio are more important than last year’s returns.
