| Asset Class | Theoretical Expected Return ⓘ | Approximate Expected Return After Taxes | Largest Crash Since 2007 ⓘ | Notes |
|---|---|---|---|---|
| US Stocks | 8.42 | 6.74 | -55.38 | The Expected Return is the 10-Year Treasury Yield plus Professor Damodaran's Equity Risk Premium, based on the S&P 500's valuation. Stock returns can always be much lower (or much higher) than predicted. |
| International Stocks | 9.4 | 7.52 | -61.52 | Expected US Return plus a weighted-average of Professor Damodaran's Country Risk Premiums. Calculates the risk of international markets. Assumes international returns will be higher due to greater risk. |
| Treasury Bonds | 4.57 | 3.56 | -23.92 | 10-Year Treasury yield. These bonds can decrease in value if interest rates rise, but you will not lose money if you hold to maturity. However, they can lose money when accounting for inflation. |
| Cash | 3.37 | 2.46 | 0.0 | Based on the rule of thumb that for maturities of up to 10 years, 1 month in maturity time is worth .01% in added returns. That is, investors are assumed to accept 1.2% less in returns for the stability of cash vs. 10-year bonds. |
| Investment Grade Corporate Bonds | 5.09 | 3.72 | -24.95 | Corporate Bond Yields minus expected losses due to bankruptcies, assuming they occur at historical rates. |
| High Yield Corporate Bonds | 5.02 | 3.66 | -34.25 | Yields on riskier (Junk) Corporate Bonds minus expected losses due to future bankruptcies. |