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7% is ambitious for any portfolio right now.
One of my pensions is with Standard Life shows this rate of performance, the figures are percentages. I'm on an average risk profile
Cumulative performance is the total amount (%) that a fund has gained or lost over particular time periods.
The performance shown here is after charges
You ask: "What's a typical return?"
I don't think it's as easy as that. There is no 'typical' in investing. You could ask: "What's an acceptable return?" However, even that is tricky... as it depends on where the economic cycle is when you buy the asset.
If you look at some of the figures in your chart... the 1 year figure has obviously not achieved 7% (one is negative)... in the 3 year figures, one of the funds is a couple of a percent below 7% compound, whereas the other is over 4.5% above what you'd expect from 7% compound. The 5 year figures are a long way short of 7% compound (by my crude calcs, 7% compound would equate to 40.26%). The 10 year figures are interesting and, at first sight, appear very encouraging... but I'd suggest they're probably not that meaningful... because 10 years ago the stock market was still suffering from the 2008 crash - so I'd expect to see major growth from 10 years ago, as many stock prices were a bit bombed out then. I suspect 12 year and 14 year figures would tell a very different story (as the stock market would have been at a higher level then... rather than after the crash).
Yes, I think there can be major benefits for drawdown... but it's not for everyone. On the other hand, annuity rates have risen recently (but they're still way lower than they were 15 or so years ago).
I should have added that I guess the figures in your table are total returns... not real returns (ie I suspect they don't take account of how inflation impacts the value of the investment and the returns).
I've just done a bit of Googling and saw a figure of 5.2% annual return quoted for UK stock market between 1989 and 2014.
In this article from IC, the first expert suggests that the punter could assume 5% growth... (he also reveals the rate since 1900)
https://www.investorschronicle.co.uk/portfolio-clinic/2018/05/31/be-more-realistic-about-your-future-returns/
Yes... totally tricky... and partly because you don't know how long you're going to live. Plus it depends on whether you have kids you want to leave some money/assets to when you die. If not... and there's just you and a partner, you can think about using up all your cash/pension over the years... and then selling up your property at some point when you're almost gaga and just need cash to pay the fees for the care home!!!!
Yes... just a few years ago, I think the govt indicated a drawdown figure of 6.48% was OK-ish (I think that was at age 65). I don't think you'll find many people who'd use that figure now. Some say 4%.... but there's a growing number that suggest 3.5% (or even less if you're younger than 65... say 60 years of age).
Again, a drawdown arrangement could allow you to leave an inheritance for kids etc. On the other hand, if you had a single life annuity, it would die with you (although some may pay out for 5 years from start of contract, even if you die on day 1)... and a dual life annuity would die when you and your partner have shuffled off this mortal coil... again leaving nothing for your kids.
Seems like a good move. Assume a reasonable figure... then, if your investments do better than that, it's time to book an exotic holiday!
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Interesting article about drawdown rates... and how 4% is not current thinking...
https://www.ftadviser.com/pensions/2018/04/27/actuaries-set-3-5-as-safe-drawdown-rate/
I note that ""However, the actual sustainable income on an individual level depends on age, gender, life expectancy and investments, and therefore we would always recommend that people seek advice before deciding on their drawdown level."
How the hell can a financial advisor advise of life expectancy??
No... I'm not questioning your figure of 5%... the 5% and 3.5% apply to two different things. The 5% (if that's the figure you're using) is the assumed return on your investments while you're building up your pension pot... then the 3.5% is the figure you may want to use for the rate of drawdown when you've retired.
I'm planning to draw down more that 3.5% a year I can tell you, its not worth retiring for that dribbling amount!