I just read a frightening research report.
It was written by the leading research firm in the world, so it’s tough to refute.
First it explains why investors like you have earned such exceptional returns over the past 30 years—then it explains why those days are over.
But there’s some light at the end of this tunnel...
The “Golden Age” for Investors
Given the turbulence that’s rocked the markets in recent years—from the 2000 dot-com bust to the 2008 financial crisis—you might find it surprising to hear the past three decades described as a “golden age” for investors.
But from 1985 to 2014, returns for stocks and bonds were far higher than normal:
Over the past 30 years, stocks returned an average of 7.9%...
That’s 21.5% higher than their 100-year average.
Meanwhile, bonds returned 5% during the last 30 years….
That’s almost 200% higher than their 100-year average.
These extraordinary returns were driven by a number of trends:
- From their peaks in the 1980s, inflation and interest rates dropped like rocks. For example, in 1985, the interest rate on the 10-year Treasury bond was 11.38%. This week, it’s at 1.43%.
- Fueled by demographic changes, productivity gains, and growth in China, global economic growth was unusually strong. In 1960, global GDP per capita was less than 3000; by 2000, it was nearly 6000.
- And due to revenue gains from new markets, declining taxes, and advances in automation, corporate profits went straight up. In fact, North American companies were able to increase their profit margins by 65%.
These trends explain why investment returns have been so strong.
But as I learned in the report, those days are gone.
The McKinsey Global Institute (MGI)
The report I’m referring to was created by the McKinsey Global Institute, or MGI.
McKinsey is a consulting firm. Founded nearly a century ago, it helps businesses and governments increase their performance.
And MGI is McKinsey’s prestigious research arm. (In 2015, the University of Pennsylvania ranked it the world’s #1 private-sector think tank.)
In its report, “Diminishing returns: Why investors may need to lower their expectations,” MGI describes why the “golden era” has now ended:
- Declines in interest rates and inflation have reached their limits.
- As populations grow older, GDP growth will slow.
- And with pressure from emerging-market competitors and tech giants, the outlook for corporate profits is weak.
Topics like GDP growth and interest rates might be boring and easy to dismiss…
So let me show you exactly what this means for you.
Your Retirement Plans Are in Jeopardy
Going forward, your returns from the public markets won’t be what they were.
As the MGI report describes, annual returns for stocks could drop to just 4%. And annual returns for bonds could drop to 0%, perhaps even lower.
These lower returns will have a profound impact on you:
They could put your retirement plans in jeopardy.
As the report describes, just a two-percentage-point difference in average annual returns would mean that a 30-year-old today would have to “almost double her savings to live as well in retirement.”
And if you’re closer to retirement age (or you’re already there), you might need to triple or even quadruple your savings.
This is a frightening scenario.
So now let’s look at what you can do about it…
Take Action Now
In order to protect your retirement, you’ll need to invest in assets that can generate far higher returns.
As long-time Crowdability readers know, there’s only one place investors can consistently earn those types of gains:
The private markets.
For the last 83 years, the private markets were off-limits to most investors. Strict laws prohibited all but the wealthiest 1% from investing here.
But two months ago, a new law went into effect. It allows all citizens—regardless of their income or net worth—to invest in private deals.
We believe this could help save your retirement. Here’s why:
On average, the early-stage private markets have generated annual returns of 27%.
That’s 4 to 5 times more than what most of us earn in the stock market—and it’s enough to double your money about every 3.5 years.
As CNBC reported, this asset class gives investors like you “an easy way to nearly double the equity return that your 401(k) is generating.”
And best of all, the returns from private market investing aren’t “correlated” to returns from the public market…
So trends like low interest rates and slow GDP growth won’t affect private investors.
Now is the time to start educating yourself on private market investing—and we’re here to help:
You can start by reviewing all the educational material we have in the free Resources section of our site »