The stock market returns 4 % (opens in new tab)

People assume all sorts of wild stock market returns when they make their financial calculations. Here are some numbers that show up on web searches: 6 % 8.4 % 10 % 10.1 % 11.3 % 11.5 % 13.6 % 16 % These are all correctly computed under their respective assumptions, but they are very misleading because whatever those assumptions were, they’re not relevant for most calculations. You should assume 4 % in your calculations. Here’s one way to arrive at that: The S&P 500 has historically yielded 1...