The Target Accuracy chart measures the spread of real-world growth of a portfolio over every possible start year compared to the simple long-term average.  Use this to estimate the reasonable range of returns for a given asset allocation, to understand the accuracy of a portfolio for reaching an important goal, or to study the complex balance of investing returns and uncertainty.

Chart

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Overview

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The Target Accuracy chart studies the spread of real-world compound growth for your selected portfolio and home country and maps it against the growth you might expect from looking only at the long-term average. The dashed line represents how an account earning the average inflation-adjusted return every single year would have grown, like a laser pointer aimed at a desired target. The lines and shaded areas around it show where real investors actually landed, from the minimum and maximum on record to the baseline and stretch returns that filter out the outliers. Some portfolios have the precise aim of a sniper rifle while others have the wide spread of a shotgun, and studying that range gives you a good feel for how suitable a portfolio might be for meeting your important life goals.

The starting value setting scales every result to your own situation. Dragging the vertical gray line left and right samples the data at different timeframes, with the callouts reporting the real account values for each band. Note that the Y-axis is logarithmic, which represents percent changes as equal distances and helps visualize constant growth as a straight line rather than an exponential curve.

This chart shares its DNA with two others on the site. To study the same percentile bands expressed as annual returns rather than account values, check out Long Term Returns, and to watch every individual growth path rather than the statistical summary, try Portfolio Growth.

Featured Discussion

When Aiming for a Target Consider the Accuracy of the Weapon

Calculations

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Baseline Return

The 15th percentile real CAGR, a conservative measure excluding the worst outliers. It is expressed here as the account value that return would have produced, and marks the border between the dark and light red areas on the chart. For the full story on baseline returns, see the Long Term Returns chart.

Average Return

The smooth growth path produced by earning the average annual real return every year over the specified timeframe. It’s the number most investment marketing quotes, and the dashed line shows exactly what believing it would imply. The distance between that line and the real outcomes around it is the entire point of this chart.

Stretch Return

The 85th percentile real CAGR, an optimistic measure excluding the best outliers. It is expressed here as an account value, and it marks the border between the dark and light blue areas on the chart. While the odds are against you personally earning it, it’s a realistic upper bound for projections.

Assumptions

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• All returns are adjusted for inflation and expressed in the home country’s currency.
• Portfolios are rebalanced annually, and returns include reinvested dividends.
• Returns ignore taxes and fund fees.
• Calculations cover every year since 1970 for the selected home country.
• Results model a single starting investment with no additional contributions along the way.

Discussion

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