Elroy Dimson

William Green There are still plenty of institutional investors in the US who would be talking about 5%.

I think to get to numbers like that, you've got to be claiming that you can not only get the equity premium, but you can identify clever managers who will outperform the pack.

That's hard.

I would take the view that over a 10-year period, a plausible real return from bonds might be 2%.

And so if that risk premium is relative to bonds, the equity bond premium of 3% would give rise to 5% return above inflation.

But it will leave you a lot happier than if you'd been asking the same question four years ago when the long-term return on bonds would have been zero in real terms or less.

Moved not all the way back to long-term history, but the sort of numbers that people could plausibly use now are not quite as discomforting as they were.

This is to

actually the heart of what financial advisors who you're working with think about.

And I think there's another way of considering what individual savers ought to be doing.

So the traditional way would be to look at how much wealth there is and say, well, this is what you can afford to be spending over years into the future.

There is another way, which is to say, hypothetically, at least, you could

take out a contract which would cover all of your needs from 800 to 101.

And let's assume that you don't expect to live beyond that.

But that's something which you could price.

It's an annuity.

You could also work out how much would be needed to help you live from 99 to 100 or 98 to 99.

Bill Sharp calls this a lockbox.

It's working back from the end of your life as to how much you need.

rather than starting where you are now and having a plan which will take you forward.