Math  /  Data & Statistics

QuestionHow Does Your Asset Mix Impact Your Returns? Best, worst, and average returns for various stock/bond allocations, 1997-2019
1. What is the average annual return if
2. What is the average annual return if someone invested 100\% in bonds? someone invested 100%100 \% in stocks? \square \square
3. What might you say to someone whose reason for investing in 90%90 \% bonds and 10%10 \% stocks is that they want a 5.4\% return on investment?

Studdy Solution
1. The average annual return for 100% stocks is 9.2%\mathbf{9.2\%}.
2. The average annual return for 100% bonds is 5.0%\mathbf{5.0\%}.
3. While a 90% bond/10% stock mix *averaged* 5.4%\mathbf{5.4\%} historically, it's important to remember that past performance isn't a guarantee of future results.

They need to understand the risks involved and be prepared for potentially lower returns.

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