There is no single figure, but historically a diversified portfolio has returned roughly 5% to 8% a year before inflation over the long term, and global shares around 4% to 5% a year after inflation. What counts as “good” depends on your risk, time horizon and how much you pay in charges.
The short answer
- There is no single “good” return: it depends on your risk, horizon and charges.
- Long term, global shares have averaged ~4%–5% a year after inflation; balanced portfolios less.
- Judge returns in real (after-inflation) terms, not headline figures.
There is no universal “good” number, because a return only means something in context, the risk you took, the time you gave it, and what inflation and fees did to it. That said, history gives useful anchors. Over the long run, global shares have delivered roughly 4%–5% a year after inflation, and a diversified multi-asset portfolio somewhere in the region of 5%–8% a year before inflation. The longer your horizon, the more reliably you tend to capture those averages.
Real returns matter more than headline returns
The single most important adjustment is inflation. A 6% return when inflation is running at 2% (the Bank of England’s target) is a real return of about 4%: that is the figure that reflects genuinely growing purchasing power. Judge your investments in real terms, not headline terms, or you will flatter years of high inflation and unfairly punish calm ones.
Rough long-run average annual returns by asset type (illustrative, before charges)
| Asset | Nominal (before inflation) | Real (after ~2% inflation) |
|---|---|---|
| Global shares (equities) | ~7%–9% | ~5%–7% |
| Balanced portfolio (≈60/40) | ~5%–7% | ~3%–5% |
| Government / high-quality bonds | ~3%–5% | ~1%–3% |
| Cash / savings | ~2%–4% | Often near zero or negative |
These are long-run averages, not promises, actual returns arrive in a jagged sequence of good and bad years. The table also shows why cash, though it feels safe, often struggles to beat inflation over time, which is the core argument for investing at all rather than leaving long-term money in a savings account. We explore this trade-off in how to start investing.
What a good return depends on
- 1
Your time horizon
The longer you invest, the more short-term volatility smooths out and the more you can lean towards higher-returning shares. A five-year goal and a thirty-year goal call for very different portfolios.
- 2
Your risk tolerance
Higher expected returns come with bigger falls along the way. A “good” return is one you can actually stick with through a downturn, see understanding investment risk.
- 3
Your charges
Fees come straight off your return. Paying 1.5% instead of 0.5% a year can cost you a large share of your final pot over decades, so keep costs firmly in view.
- 4
Your asset mix
The split between shares, bonds and cash drives the great majority of your long-term return, far more than picking individual funds.
Be wary of anyone promising a number
A regulated adviser will talk in ranges and probabilities, not guarantees. Any “guaranteed” high return, or a figure quoted with total certainty, is a classic warning sign of a scam.
Judging your own returns fairly
Compare your portfolio against a sensible benchmark for its risk level, not against the single best-performing fund or a friend’s lucky year. A globally diversified fund that matches the market, minus a small fee, is doing its job. Chasing a higher headline number usually means taking more risk or paying more in charges, and often both. What matters is a return that keeps you comfortably ahead of inflation and on track for your goals, which is the whole point of investment management.
Why the order of returns matters too
Averages hide an important subtlety: the order in which returns arrive can matter as much as their size, especially once you are drawing on your money. Two investors can experience the same average return over twenty years yet end up in very different places if one suffers heavy losses early on. While you are still contributing, a market fall is actually an opportunity to buy in cheaply; once you are taking an income, an early crash can do lasting damage. This is known as sequence-of-returns risk.
The practical lesson is that a “good” return is not just a high average: it is a return achieved with a level of risk you can live with, and a portfolio structured so that a bad run at the wrong moment does not derail your plans. Holding some lower-risk assets or a cash buffer to draw on during downturns is one way advisers manage this. It is also why the same 6% can be a triumph for one investor and a worry for another, depending entirely on when it lands. In short, aim for the highest return you can reasonably expect for the risk you are genuinely comfortable holding, and no higher than that, because reaching for more return almost always means reaching for more risk.
If you want a portfolio built around a realistic, risk-appropriate target return, Vetted Wealth can match you, free of charge, with an independently vetted, FCA-regulated adviser. Past performance is not a guide to the future, investments can fall as well as rise, and this is information, not personal advice.
In summary
- There is no single “good” return: it depends on your risk, horizon and charges.
- Long term, global shares have averaged ~4%–5% a year after inflation; balanced portfolios less.
- Judge returns in real (after-inflation) terms, not headline figures.
- Fees come straight off your return, so keeping charges low is vital over decades.
- Be deeply sceptical of any guaranteed or certain-sounding high return, it signals a scam.
Sources and further reading
- Investing basics MoneyHelper
- Check the Financial Services Register Financial Conduct Authority
- Individual Savings Accounts GOV.UK
Read the full guide
For the complete picture, see our in-depth guide: How to Build an Investment Portfolio.
Speak to a vetted investment management specialist
This is free information, not personal advice. When you’re ready, we’ll match you with an independently vetted, FCA-regulated specialist, free, and with no obligation.
