Anecdotally I can confirm there's been a few 40% years in the past decade, but it really is a gamble, and because of survivorship bias it's easy to only hear about the ones that gained and not the ones that lost.
I started my investing journey about 5 years ago, started with stock picking, and my average yearly return is... 4.5% p.a.
I would've 100% been better of investing in a low fee index fund, like S&P500 (VOO), or even just a world ETF like VT.
I picked some winners, like Microsoft / Google, both up 150%, but they're tiny fraction of my total portfolio, so hardly returned anything all counted up. I did 170% at one point with Tesla too, but didn't sell at the peak. So ended up with 4.4%p.a. over 5 years.
Save to say I don't stock pick anymore and just buy VTI (kinda like VOO) and some VT.
Lore has it that SP500 doubles your money every 7 years. If someone is 60 and just started, well, it's not going too high.
But for someone who is 20something and begins placing $€200 per month in SP500 (preferably somewhere with the lowest possible fees), and does so every month for all the years he/she works, then there is a very nice surprise waiting for them (and their kids) later in life.
Keep in mind, investment funds don't die like our pensions, they are transferred 'down'. So even if someone has e.g. 200k when they have kids, by the time those kids turn 21, that 200k would have turned to 0-7yo 200k->400k, 7-14yo 400k->800k, 14-21yo 800k->1600k. It needs discipline and consistency though.
Can’t argue with the math but there are still risks (inflation, the government that issues your currency, etc). I’ve seen people sell all investments to buy all the supplies they need to live out their lives, and I used to think it was insane. But it is just a different sort of hedge.
I hope you don't think that type of return is normal. Anything, sustained, over 1% should make use suspicious. Really, that would be 12% per year. That is excellent return over the long run. We are in a mini-bubble, thanks to the Magical Six.
Oh yeah, I'm well aware these are very high returns, and chances are high that we'll soon get a year of -30% or the like, as the average p.a. return over 25 years is usually ~7-10%, depending what timeframe you mesure. (ex fees and tax)
I'm under no illusion that this will continue going forward.
