Returns per year

There are many ways you can benchmark your return on. Theres no right or wrong reference, and it is totally up to what you are most comfortable at.

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Some examples are:

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(1) "Risk-free rate". This means the rate of return if you invest in guarenteed return products out there. The universal benchmark would be the 10 year government bond yield rates (SG & US: 1.4%)

(2) CPF. OA - 2.5%, SA:4%. Usually used for people who invests using the CPF, or if you are thinking if its more worth it contribute to your CPF vs doing own investments. Note to factor in that you can only take out cpf money after 55 years old (cpf contributions/investing is more for parking in excess cash that you dont need now)

(3) Market returns. On average, the S&P 500 makes a 10% rate of return, SPDR STI ETF is around 2-3%?.

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The whole idea of benchmarking is not to compare to others or to feel good, but more to help justify your choices between higher risk products vs guarenteed/proven low yielding products. I.e if you have 3-4% returns a year for US stock portfolio, wouldnt it be better to invest directly to S&P 500?

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Rates are as per time of writting

Hi anon,

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A total return of 5% p.a. is reasonable if your portfolio is spread across multiple asset classes.

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Of course, the next thing would be to question how much volatility you are taking on for this level of returns.

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5% p.a. returns with no risk is fantastic but only a part of your CPF monies can achieve that.

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5% p.a. returns with 20% volatility is not something you'd want since that is quite a fair bit of volatility.

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Don't chase returns. Chase risk-adjusted returns that have an acceptable volatility to you.