Vanguard Mutual Funds, a not-for-proft, has created historical returns of various portfolios that are made up of different mixes of stocks and bonds going all the way back to 1926. Below are the returns of those different allocations.
Income
An income-oriented investor seeks current income with minimal risk to principal and is comfortable with only modest long-term growth of principal. They have a short-to mid-range investment time horizon.
Figure 13.3. AV Annual Return 1926 to 2018 by Fred Rowland is used under a CC BY-NC 4.0 License.
Balanced
A balanced-oriented investor seeks to reduce potential volatility by including income-generating investments in their portfolio and accepting moderate growth of principal and is willing to tolerate short-term price fluctuations. They have a mid- to long-range investment time horizon.
Growth
A growth-oriented investor seeks to maximize the long-term potential for growth of principal and is willing to tolerate potentially large short-term price fluctuations. They have a long-term investment time horizon. Generating current income is not a primary goal.
We can actually trace the historical returns on stocks and bonds going all the way back to 1870. The historical returns do not, of course, guarantee that the same returns will happen in the future, but most of the stock market investors are wise, and wise investors demand certain minimum returns in order to take the risk on investments.
In their 2019 study of investment returns, The Rate of Return on Everything, 1870–2015, Òscar Jordà , Katharina Knoll, Dmitry Kuvshinov, Moritz Schularick, and Alan M Taylor calculated returns on stocks, bonds, and housing in 16 developed nations going all the way back to 1870. As Thomas Picketty notes in his book Capital in the Twenty-First Century, housing is important in all developed nations, since it represents approximately one-half of the wealth in a typical economy (2021). Here is a graph of the real rates of return in the world:
Figure 13.4. Rate of Returns on Assets. Source: Jorda data (2019).