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A reader left the following comment on the Seeking Alpha version of my Understanding Time Horizon post:

Investing real dollars with the goal of merely matching inflation would end up providing a miserable return. Two rough numbers: the rate of inflation over the last 40 years, a typical investment lifetime for that horizon: 3%. The rate of return of the S&P 500 over that same time period: 9%. Given the fact that you can purchase index funds that replicate that 9% return, why would an investor, matching his wits and experience with the 'average', settle for less? If my rate of return over that same time period had been DOUBLE that 3% inflation rate, I would have been disappointed.

And my reply:

You're missing a big point here. The 9% you cite is backward looking. Future returns might be better than 9%, the same or worse; there is no way to know and that outcome will be completely out of your control.
What if equity returns only average 3%? From March, 2000 to now they are less then that and at 3% you would be lucky to beat inflation. That is not a prediction, the point is we don't know and have no control.

If equity returns are lower than 9% and the party is over for the bond market then returns could be lower than what people might be used to.

Unfortunately there must be an element of luck, good or bad, in our investing lifetimes. Luck plays a bigger role than most people would like. Since so much of future stock market returns and events are beyond our control, it is crucial that we remain disciplined, have a high savings rate and live below our means. We have a chance of controlling those things.

It is not realistic to expect 9% per year in the equity portion of your portfolio for the next 40 years unless the market is somewhere in that vicinity. You may or may not outperform the market but 9% in a 3% world (if that is how it shakes out) will not happen.

Source: Luck Plays A Bigger Role Than The Average Investor Likes To Admit