What are realistic return assumptions for my plan?
A goal question measures a portfolio against a target — an allocation you are aiming at, or an amount — and says how far from it the portfolio currently stands.
Worked through on a sample portfolio. The figures below are that portfolio’s, not yours.
I can explain how to set realistic return assumptions using your portfolio figures and common practice. I’ll show a simple approach you can use to pick assumptions for planning (expected return and volatility), and I’ll compute example assumptions from your own portfolio data.
Table — today’s headline numbers used for assumptions
| Metric | Value |
|---|---|
| Portfolio value (today) | 90.989,80 € |
| Total invested (capital paid) | 63.990,15 € |
| Unrealized gain | +21.489,42 € |
| Portfolio annualized volatility (%) | 16,36% |
| Time-weighted return (%) | +45,97% |
| Money-weighted return (%) | +11,25% |
How to pick realistic assumptions (plain steps)
- Use long-term historical averages as a baseline: broad equities ~5–7% real (varies by region), bonds lower, cash ~0–1% real. Add expected inflation to get nominal estimates.
- Adjust for your portfolio mix: weight asset-class expected returns by their current allocation to get a portfolio expected return.
- Use your portfolio’s volatility as the expected risk input. Your portfolio’s annualized volatility is a starting point for scenario ranges.
- Build three scenarios: conservative, central, optimistic — vary expected return and volatility around your baseline (e.g., central = baseline; conservative = baseline −2% and lower volatility; optimistic = baseline +2% and higher volatility).
- Always state the assumptions (which assets, period, fixed factors).
Three example scenarios computed from your data (assumptions shown) Assumptions common to all three: applied to today’s holdings (no buying/selling); exchange rates and allocations fixed; inflation ignored (nominal returns); portfolio mix is as shown.
| Scenario | Expected annual return (%) | Expected annual volatility (%) |
|---|---|---|
| Conservative — lower growth | +3,00 | 16,36% |
| Central — baseline from history and mix | +6,00 | 16,36% |
| Optimistic — stronger market | +9,00 | +18,00 |
Notes on how these were chosen
- I used your portfolio annualized volatility (16,36%%) as the risk anchor.
- Central (+6,00%) is a plausible long-term nominal return for a mixed growth portfolio with ~80% growth-like assets (stocks, ETFs, crypto) and some cash/precious metal.
- Conservative lowers the return by ~3 percentage points to reflect weaker markets; optimistic raises it by ~3 points and uses a slightly higher volatility to reflect stronger, more volatile growth.
- You can change these scenario returns by replacing the percentages above; I’ll recompute the resulting numbers if you want.
If you want, I can:
- Convert these into projected portfolio paths over 1, 5 and 10 years under each scenario, or
- Build scenario returns that include an inflation assumption or different per-asset shocks.
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Related questions
- What happens if my returns are lower than expected?
- How much difference does reinvesting dividends make over time?
- Should I prioritize growth, stability, or income given my stated objective?
- Is my current portfolio too complex for my long-term strategy?
- Which parts of my portfolio are not aligned with my goals?
See this for your own portfolio
The assistant answers the same question about your own holdings, with your figures and today’s prices. Import from your broker, or open the demo portfolio and ask it there.