Looking for 10% Returns? Not so Fast.

Or so says bond guru Bill Gross,co-chief investment officer of Pimco and manager of the planet’s biggest bond mutual fund.

“The important thing to recognize is that if you’re looking for 10% returns to pay for college or to retire on, they’re not going to be there. We’ve been an asset-growth-based economy for so long. We’ve skimmed off the top, living off second and third mortgages on homes, and capital gains on stocks and even on bonds. Now instead of having money work for you, you’ve got to work for your money.”

No more investment books touting 12% returns “over the long haul”. The new normal will require more hands on, thoughtful investment strategies. So what should we expect?

Instead of 10% returns for stocks, look for five or so. And instead of the past 20 years’ returns on bonds, which are actually better than stocks — close to double digits — it’s 4% going forward. So that’s what the new normal is. And it’s based upon the primary assumptions of a deleveraging of the private sector and the public sector being limited in what it can spend.

Read the entire article on Money.com.

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