Young people stand to make dismal returns on their investments — Economist

From Credit Suisse’s latest global investment returns yearbook, Generation Z’s earnings from stocks and bonds will be significantly lower than those of previous generations.

www.economist.com/graphic-detail/2021/03/15/young-people-stand-to-make-dismal-returns-on-their-investments

“They estimate that baby-boomers (defined here as those born 1946–64), Generation X (born 1965–80) and Millennials (born 1981–96) have all earned average real returns of at least 5% on equities and at least 3.6% on bonds. The authors then forecast what Generation Z might expect to earn in the coming decades. To do this, they assume that the real return on equities will be equal to the inflation-adjusted return on a risk-free asset (represented by Treasury bills), which they estimate at -0.5%, plus a “risk premium” for buying equities of about 3.5%, for a real return of just 3%. For bonds, the authors assume the current, negative real yields on the index-linked variety. All of this adds up to annualised returns for Gen Z of a mere 2% on a 70:30 portfolio of stocks and bonds—not even a third of the historical return of the baby boomers (see chart). These guesses could prove too pessimistic, but perhaps not dramatically so.”

READ  WHO changed their definition for “herd immunity”
READ  Commies March For Mass Murderers on May Day - Their Chants will TERRIFY You

 

h/t steeldeal80

376 views

Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.