A:

Many financial advisors would feel that an 8% rate of return is too high, and are more likely to work with 4-5% estimated return, depending on the dollar amount that is assumed will be invested.

The 8% (or more) rate of return became the norm for financial advisors when doing projections during the 1990s and 2000s because the portfolios that they managed were producing 8% returns, and in some cases, even higher returns. By 2008, however, things had begun to change as advisors became less optimistic about the likelihood that these high returns would be possible going forward on a consistant basis.

Unfortunately, Investopedia does not know of a nice safe place for one's nest egg that pays 8%, and it is unlikely that anyone else does either. That said, take financial articles for what they are worth: general education to increase awareness. If you are looking for projections that apply to you, visit a professional. Your best bet would be to contact a financial planner and create a plan that best suits your needs for today and your golden years. (For more on retirement planning, check out our Retirement Planning Tutorial.)

RELATED FAQS
  1. Is an index fund better than having to hire a financial advisor?

    I would like to know if I put my money into an index fund, preferably the S&P 500 Index fund, would that be better than ... Read Answer >>
  2. Why does my IRA keep losing money?

    I have a Roth IRA and it keeps losing money. The investment firm never calls to let me know what's happening. It's ... Read Answer >>
  3. How do I choose between an independent CFP and a trust CFA portfolio manager?

    I need to choose between an independent, reputable, and vetted CFP who is trustworthy and a trust CFA to manage my investment ... Read Answer >>
  4. What's the difference between absolute and relative return?

    Knowing whether a fund manager or broker is doing a good job can be a challenge for some investors. It's difficult to define ... Read Answer >>
  5. How do I become a financial advisor?

    Hi there, I am a senior accounting major at university. After college I would like to receive my CPA and CFA and work as ... Read Answer >>
  6. How does the required rate of return affect the price of a stock, in terms of the ...

    First, a quick review: the required rate of return is defined as the return, expressed as a percentage, that an investor ... Read Answer >>
Related Articles
  1. Retirement

    Can Your Retirement Portfolio Rely on High Rates of Return?

    Some experts speculate that stock market returns may be headed downward and investors should strategize accordingly. But are they right?
  2. Financial Advisor

    Can You Afford a Financial Advisor?

    Don't think you can afford a financial advisor? Think again. Here's why you should reconsider hiring an advisor.
  3. Retirement

    How to Hire a Retirement Advisor

    Making a retirement plan is a demanding task. Finding the right person (or people) to do it takes care.
  4. Financial Advisor

    What Do Financial Advisors Do?

    Just what does a financial advisor do? A lot, in fact. And any potential client should do their due diligence and come prepared with questions.
  5. Financial Advisor

    Do You Need More Than One Financial Advisor?

    Using more than one financial advisor for money management has its pros and cons.
  6. Personal Finance

    How to Interview Your Financial Advisor

    When it comes to choosing a financial advisor, investors have to do homework. That means interviewing multiple advisors and asking the tough questions.
  7. Financial Advisor

    What People Hate About Financial Advisors

    Advisors need to make a living too, but doing so by cutting corners at a client's expense isn't right. Here are the top complaints against advisors.
  8. Financial Advisor

    7 Steps To Evaluate A Financial Advisor

    Looking to hire a financial advisor but unsure what you want or need? Follow these seven steps.
  9. Financial Advisor

    Do You Need A Financial Advisor?

    Not everyone needs a professional. Find out how to make the call.
  10. Financial Advisor

    How to Manage a Client's Return Expectations

    One of the most critical functions of an advisor is to set realistic return expectations for their clients. Here are some ways to achieve this.
RELATED TERMS
  1. Return

    The gain or loss of a security in a particular period. The return ...
  2. Mean Return

    1. In securities analysis, it is the expected value, or mean, ...
  3. Abnormal Return

    A term used to describe the returns generated by a given security ...
  4. Financial Adviser

    A professional who helps individuals manage their finances by ...
  5. Expected Return

    The amount one would anticipate receiving on an investment that ...
  6. Estimated Long-Term Return

    A unit investment trust's estimated return over the life of the ...
Hot Definitions
  1. European Union - EU

    A group of European countries that participates in the world economy as one economic unit and operates under one official ...
  2. Sell-Off

    The rapid selling of securities, such as stocks, bonds and commodities. The increase in supply leads to a decline in the ...
  3. Brazil, Russia, India And China - BRIC

    An acronym for the economies of Brazil, Russia, India and China combined. It has been speculated that by 2050 these four ...
  4. Brexit

    The Brexit, an abbreviation of "British exit" that mirrors the term Grexit, refers to the possibility of Britain's withdrawal ...
  5. Underweight

    1. A situation where a portfolio does not hold a sufficient amount of a particular security when compared to the security's ...
  6. Russell 3000 Index

    A market capitalization weighted equity index maintained by the Russell Investment Group that seeks to be a benchmark of ...
Trading Center