Historical Returns by Asset Type

  • Bank deposit: 0.3–0.5% (very low risk)
  • Bond fund: 3–5% (low-medium risk)
  • Index fund: 8–10% (medium-high risk)
  • Active equity fund: 10–15% (high risk)
  • Individual stocks: Unstable (very high risk)

Nominal vs. Real Return

If your fund grows 8% but inflation is 3%, your real purchasing power growth is only 5%. If your return is below inflation, you are getting poorer.

The Impossible Triangle of Investing

You can never get all three: High Return + Low Risk + High Liquidity. You must choose two.

  • High return + Low risk = Lock up money long-term
  • High return + High liquidity = Accept high risk
  • Low risk + High liquidity = Accept low returns (bank deposits)

Set Your Expectation

  • Conservative: 2–4% (deposits, bonds)
  • Balanced: 4–8% (bonds + partial index funds)
  • Aggressive: 8–12% (stock funds, index portfolios)

Warning: Higher returns always mean higher risk. If someone promises high returns without risk, be careful.