5 Key Takeaways From Expert Forecasts That Can Help Your Financial Plan

Key Takeaways

• Investors should dismiss very short-term forecasts, but long-term forecasts can help you determine how much help your plan can get from the market.
• The US equity return assumptions are pretty muted for over the next decade, so when looking at your portfolio, you want to take inflation into account and then think about diversifying across equities.
• Non-US stocks actually look more attractive than their US counterparts over that 10-year horizon. In your portfolio, getting in line with the global market cap’s weighting of US stocks versus non-US stocks and emerging- versus developed-market exposure are really good benchmarks.
• Anyone 50 and above should be thinking of tipping more of their portfolio into fixed-income assets and also adding some inflation insulation to that portion of the portfolio as well, given bond market forecasts.

**Margaret Giles: **Hi, I’m Margaret Giles from Morningstar. Every January, Morningstar Director of Personal Finance and Retirement Planning Christine Benz takes a look at capital markets assumptions prepared by major investment firms. She’s here to discuss whether and why investors should pay attention to these forecasts, as well as some of the key takeaways from the 2026 roundup. Christine, thanks for being here.

**Christine Benz: **Margaret, great to see you.

How to Use 10-Year Forecasts When Financial Planning

**Giles: **Many investors take market forecasts with a grain of salt, perhaps as well they should. Why do you think that these 10-year forecasts are different and potentially useful when it comes to financial planning?

**Benz: **Right, I’m fully on board with investors dismissing those very short-term forecasts, like, what will the market do in 2026? Who knows? But the reason I like these long-term forecasts, which are often called “capital markets assumptions” when various asset managers put them out, is that you have to plug in something into your plan. So you’re looking to determine how much help you are expecting to get from the market. If you are someone with a very long time horizon, if you’re in your 20s and 30s, I think you could reasonably use the market’s historical long-term returns, something in the neighborhood of anywhere between 8% and 11%. But if you have a shorter spending horizon, maybe you’re about to embark on retirement, or you’re saving for some shorter-term goal, like your 12-year-old is going to be heading off to college in the next six years, it’s important to you to think about what the various asset classes might return over that shorter time horizon, and I would adjust those historical markets assumptions accordingly. So if the forecasts are especially sober, if we’re calling for really poor returns over the next decade, you’d want to shrink the return expectations. If things are looking really good and stocks look especially cheap or bonds look especially return-robust, you would want to factor in higher returns. So I think it’s important for those shorter horizons.

What Muted US Equity Return Assumptions Mean for Your Portfolio

**Giles: **Right. So one thing that you note in your article about these forecasts is that the US equity return assumptions are pretty muted for over the next decade. So how muted, and what are the implications for investors’ plans and portfolios?

**Benz: **Yeah. When I look at them, they generally clustered between, say, 4% at the low end and 7% at the high end across providers. So no one’s calling for, at least over the next decade, anything like the 15% return we’ve had from US stocks over the past decade. So a couple of takeaways for me: One is that inflation is an important component of this. So those are nominal numbers, that 4% to 7% that I referenced. If inflation is going to come up and take, say, 2.5 percentage points of that return, you want to make sure that you are thinking about inflation as a component of whatever you’re planning you’re doing. And then you would also want to think about diversifying across equities. So one of the reasons why the return forecasts are so muted for US stocks is simply because that large-cap growth square of the US market has had such phenomenal results, and it means that we would really want to temper our expectations for the whole US market. If you have US market exposure in your portfolio, to me, that suggests you want to look beyond US large growth. You probably want to have some holdings there, but you also want to be looking to value, smaller-cap stocks, non-US stocks as well. You don’t want to be sticking with just a total US market index because you’re probably, or you are, pretty concentrated in those large-cap US growth stocks.

Experts Forecast Stock and Bond Returns: 2026 Edition

As 2026 kicks off, long-term return expectations for bonds are within shouting distance of stocks’.

Are Non-US Stocks More Attractive Than US Stocks?

**Giles: **Right. So a consistent theme that you’ve seen since you’ve started doing these roundups is that non-US stocks actually look more attractive than their US counterparts over that 10-year horizon. So is that still the case, given the runup that we’ve seen over the past year?

**Benz: **It very much is. So I will caveat that and say that most of the forecasts that I used when I did this compilation came from, like, Sept. 30, 2025, so it didn’t incorporate the full year’s worth of performance from non-US stocks. But the return assumptions for non-US stocks were, again, meaningfully higher than was the case for US stocks, and that’s true for both developed and emerging markets. And it was across the board. Every single firm in my roundup was calling for higher returns from non-US stocks. So I think that’s a consistent finding, and I think people should take it to heart as they think about doing their portfolio’s positioning and revisiting their portfolio’s allocations.

How to Use the Global Market Cap as a Benchmark for Equity Exposure

**Giles: **Right. How should investors be thinking about incorporating that finding into their plans?

**Benz: **I think you want to look at your portfolio’s equity allocation, and within it, look at your allocations to US and non-US stocks. And here, the total market capitalization, the total global market capitalization, I think, is a nice benchmark for you, where, when you look at today, it’s roughly two-thirds US, a third non-US. Most US investors do not have a third of their portfolios in non-US stocks. I think this is particularly important for the young accumulators who are looking at how their portfolio is allocated internationally. To me, emphasizing or at least getting in line with the global market cap’s weighting of non-US stocks seems like a really good benchmark. You also want to look at the emerging relative developed-markets exposure. When we look at the global market cap, today, it’s roughly 90/10, so I think that’s a good benchmark for investors as well.

How to Use Bond Market Forecasts in Your Portfolio

**Giles: **All right, so to wrap up here, when I read your article, I can’t help but notice that there’s a greater difference in opinion in those equity forecasts than there are for bonds. So why is that, and what are the implications for portfolio positioning?

**Benz: **You’re totally right, Margaret, that you see a lot of uniformity when you look across the fixed-income assumptions, and the reason is that starting fixed-income yields are quite a good predictor of fixed-income returns for the subsequent decade. And so most firms are looking at yields on 10-year treasuries today, or whatever subasset class of fixed income they’re looking at to do their forecasts, and they’re all kind of anchoring on the same thing, that they know that that’s a very good number in terms of their forward-looking forecasts. So people should take that to heart.

One thing that jumped out at me in this roundup was that for a couple of the asset managers, including Vanguard as well as Research Affiliates, the high-quality US fixed-income return expectations were actually higher than their US equity return assumptions. And so to me, that suggests that there’s not too great an opportunity cost for derisking that portfolio today. Especially if you’re an older adult who is in drawdown mode, so you’re actively decumulating from that portfolio, tipping a little bit more into fixed income, high-quality fixed income, to me, looks like a pretty good trade to make because you are setting aside a portion of your portfolio that you could spend from if equities encountered some kind of extended downdraft. So to me, that is a key takeaway, that balance is a really good practice for older adults. Anyone 50 and above should be thinking of tipping more of their portfolio into fixed-income assets, and also adding some inflation insulation to that portion of the portfolio as well, because inflation will tend to eat into the fixed-income returns over time. So balance, I think, should be your watchword if you’re an older adult.

**Giles: **All right. Christine, thanks for giving context and perspective on these forecasts, and thanks for taking the time.

**Benz: **Thanks so much, Margaret.

**Giles: **I’m Margaret Giles with Morningstar. Thanks for watching.

Watch 6 Retirement Must-Knows for 2026 for more from Christine Benz and Margaret Giles.