Client-Specific Return Assumptions
RightCapital is designed to achieve financial planning, done just right. You are always in control of the advising philosophy and the underlying assumptions involved. You have complete control over each and every client's individual return assumptions, providing a platform for world-class, personally tailored advising.
Accessing Individual Return Assumptions
When customizing individual return assumptions users can adjust the percentage of interest, dividend, and capital gains which add up to the total return figure for each asset class. The new rates of return will only be applied to the client whose settings are adjusted.
Default Return Assumptions
Below are the default return assumptions based on historical index return data that you can choose to reference as you are setting your return assumptions. These assumptions reflect a geometric return calculated from the return data indicated.
Please review the data below or use your own historical data to set your return assumptions.
Asset Class | Interest | Dividend | Capital Gain | Total Return | Index Data Used |
---|---|---|---|---|---|
Large Growth | - | 2% | 8.24% | 10.24% | S&P 500 Total Return Index: Dec 1971 - Dec 2022 |
Large Value | - | 2% | 8.24% | 10.24% | S&P 500 Total Return Index: Dec 1971 - Dec 2022 |
Mid Cap | - | 2% | 8.06% | 10.06% | Russell Midcap Index: Dec 1995 - Dec 2022 |
Small Cap | - | 2% | 8.18% | 10.18% | Rusell 2000 Index: Dec 1980 - Dec 2022 |
International Equities | - | 2% | 5.9% | 7.9% | MSCI EAFE Index: Dec 1971 - Dec 2022 |
Emerging Markets | - | 2% | 7.44% | 9.44% | MSCI Emerging Market Index: Dec 1987 - Dec 2022 |
Real Estate | - | 2% | 7.01% | 9.01% | MSCI US REIT Index: Dec 2009 - Dec 2022 |
Government | 3.89% | - | 0% | 3.89% | 10 Year Treasury Bond: Dec 1999 - Dec 2022 |
Municipal | 4.27% | - | 0% | 4.27% | Barclay Muni Bond Index: Dec 1999 - Dec 2022 |
Corporate | 3.99% | - | 0% | 3.99% | Barclay Aggregate Bond Index: Dec 1999 - Dec 2022 |
High Yield | 6.03% | - | 0% | 6.03% | BofA Merrill Lynch US High Yield Index: Dec 1999 - Dec 2022 |
International Bonds | 3.99% | - | 0% | 3.99% | Barclay Aggregate Bond Index: Dec 1999 - Dec 2022 |
Cash | 1.58% | - | 0% | 1.58% | 3 Month Treasury Bill: Dec 1999 - Dec 2022 |
Other | - | 2.00% | 8.24% | 10.24% | Use S&P 500 as Proxy |
Option to use Forward Looking Return Assumptions
Many financial institutions provide forward looking return assumptions. Below is summary information from JP Morgan's Long Term Capital Market Assumptions. You can review the detailed JP Morgan report here ↗️. There are also other financial institutions that provide long term capital market assumptions.
Asset Class | 2023 Total Return |
---|---|
Large Growth | 7.90% |
Large Value | 7.90% |
Mid Cap | 8.00% |
Small Cap | 8.10% |
International Equities | 10.50% |
Emerging Markets | 10.10% |
Real Estate | 5.70% |
Government | 3.60% |
Municipal | 3.70% |
Corporate | 5.50% |
High Yield | 6.80% |
International Bonds | 3.60% |
Cash | 2.40% |
Other | 7.90% |
Determining the Rate of Return Used in a Plan
For additional considerations when adjusting individual return assumptions, please review the global asset return assumptions article.