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Vanguard's Portfolio Allocations page (1926-2019) shows 9.21% Average annual return for 70% Equity and 30% Fixed income.

Does this mean 9.21% compounded annually?

GOAL...
If at age full retirement age (66-1/3) I begin taking social security and investing in 70% equity & 30% fixed income funds, how much will I accumulate by age 70?

I want to use (ie. find or write) a program to forecast how much principal I'll have at 70.

For accuracy, should I compound annually or continually or daily?

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    Although the average over 93 years has been 9.21%, it is highly unlikely that the 3 1/2 years you are trying to predict will perform the same. It will almost certainly be higher or lower. You can find 3 1/2 year periods of history when the average was +20% and other 3 1/2 year periods where it was -20%.
    – chili555
    Commented Nov 20, 2022 at 21:31

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You should use annual compounding since that's how it was measured, but it shouldn't make a significant difference. There is enough variance in historical returns that the margin of error for expected future returns will be much higher than any difference due to compounding.

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Annually.

If portfolio returns 9,21% annually, then after 4 years the return would be +42,25%

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  • Thanks. Out of curiosity, how did you get 42,25% ?
    – Doug Null
    Commented Nov 19, 2022 at 16:19
  • 1.0921 cubed, minus the starting 1.
    – keshlam
    Commented Nov 19, 2022 at 18:05
  • Cubed means raised to the third power and would not result in 42.25%, you took 1.0921^4
    – Hart CO
    Commented Nov 19, 2022 at 18:29
  • Correct; typo in my comment. Unfortunately SE doesn't allow editing comments after a few minutes. I could delete it and repost, but that would leave @HartCO's comment floating. Hopefully it's good enough to briefly illustrate compounding interest.
    – keshlam
    Commented Nov 23, 2022 at 21:56

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