Hi Guys,
On pg 4 of the linked publication, vanguard states: "The VCMM’s 10-year median return forecasts are 4.02% for U.S. stocks and 1.31% for U.S. bonds—both below the historical averages. Its inflation forecast is 1.58%. Accounting for inflation, the 10-year VCMM median forecasts of real returns are 2.44% for U.S. stocks and –0.27% for U.S. bonds."
Just to check my understanding of calculating a real rate of return (say, r_real) from a nominal rate (say, r_nom) with inflation, it's not r_nom-inflation as the publication states, right? It's actually r_real=(1+r_nom)/(1+inflation)-1, right?
So for U.S. stocks in their paragraph, 2.40% (calculation url: https://www.wolframalpha.com/input?i=1.0402%2F1.0158-1) and their 2.44% is in error.
-b4xt3r
https://corporate.vanguard.com/content/ ... Online.pdf
On pg 4 of the linked publication, vanguard states: "The VCMM’s 10-year median return forecasts are 4.02% for U.S. stocks and 1.31% for U.S. bonds—both below the historical averages. Its inflation forecast is 1.58%. Accounting for inflation, the 10-year VCMM median forecasts of real returns are 2.44% for U.S. stocks and –0.27% for U.S. bonds."
Just to check my understanding of calculating a real rate of return (say, r_real) from a nominal rate (say, r_nom) with inflation, it's not r_nom-inflation as the publication states, right? It's actually r_real=(1+r_nom)/(1+inflation)-1, right?
So for U.S. stocks in their paragraph, 2.40% (calculation url: https://www.wolframalpha.com/input?i=1.0402%2F1.0158-1) and their 2.44% is in error.
-b4xt3r
https://corporate.vanguard.com/content/ ... Online.pdf
Statistics: Posted by B4Xt3r — Sun May 26, 2024 1:00 pm — Replies 1 — Views 465