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Returns over the decades

You might be asking how typical is a return of over 11% p.a.? Is it realistic to expect more or less than this in the future? To help you answer this, I have obtained the returns on UK shares for the whole period 1900 to the beginning of 2012, as well as the returns for each of the decades.^† The return numbers in the first column of Table 1.1 are ‘real returns’ – the return you would have received above inflation. It is interesting that only one decade, 1910–20, showed a negative average annual return. The rest all provided positive returns above inflation.

With inflation added back in (nominal returns), we find that since the Second World War there have been many decades with double digit share returns. So, where do ...