Markets bounced back. Your expectations for the decade ahead probably shouldn't follow them up.
Global share markets came roaring back over the June quarter, shaking off the wobble we saw in March. The engine, as it has been for a while now, was corporate earnings — especially the big US technology companies and anyone riding the artificial intelligence wave. Strong results, rising optimism, higher prices. A good few months to be an investor.
Here's the part that doesn't fit neatly on a highlight reel: a great run doesn't hand you a great decade. Often it does the opposite.
Good news now can mean quieter news later…
When share prices climb faster than the actual earnings underneath them, you're paying more today for the same slice of future profit. That's not a disaster — it's just maths. The more you pay going in, the less room there is for outsized returns coming out. Optimism has a price, and lately it's gone up.
So while the recovery has been genuinely welcome, it has also quietly reset what the years ahead are likely to deliver.
What the long-term forecasts are pointing to…
Long-range forecasting models look past next week and next quarter and instead map the range of outcomes an investor might reasonably expect over the next ten years. They're not crystal balls. They're a way of setting sensible expectations.
Right now, those forecasts have edged lower than they were just three months ago — precisely because prices have risen. According to Vanguard Australia, here's roughly where the next decade sits, in annual terms:
The midpoints land near 5.9% a year for Australian shares and around 6% for US and international shares.
Still healthy — comfortably better than leaving money in cash. But noticeably softer than three months ago, and well short of the returns many of us have grown used to over the past decade. Worth sitting with that for a moment.
(A necessary note: these are projections, not promises. Nobody knows the future, and no model guarantees a result. They're a guide for calibrating expectations, nothing more.)
Don't overlook bonds…
Shares get the headlines. Bonds quietly get on with the job.
Bond yields held fairly steady over the quarter as markets settled into a "higher for longer" view on interest rates — the economy is holding up, shares are performing, and central banks are in no rush to cut. Against that backdrop, bonds are still forecast to pull real weight: around 5.1% a year for Australian bonds and roughly 5.6% for hedged global bondsover the next decade.
Look at those numbers next to the share forecasts and something jumps out — they're not miles apart. That's the whole point of holding bonds: meaningful return, with a lot less white-knuckle volatility along the way.
When markets get expensive, diversification pays…
As prices rise, you tend to get paid less for taking on extra risk. Higher share prices trim future returns; the extra reward for chasing riskier corners of the market shrinks too. In that environment, spreading your money across different types of investments isn't playing it safe for its own sake — it's how you stop leaning too hard on any one market to carry the whole portfolio.
The long game, as always…
Forecasts aren't predictions. But they're useful for one thing above all: keeping expectations honest.
If the last few months proved anything, it's how fast the mood can flip — March gloom to June optimism in the space of a quarter. Which is exactly why short-term moves tell you almost nothing about where you'll land over ten or twenty years.
So the plan doesn't change with the headlines. Yes, global conditions seem fragile, so it’s particularly important to invest according to your own circumstances and risk appetite. So stay diversified, stay disciplined, and stay in your lane. Keep your eyes on your own goals rather than last quarter's winners. That's not the exciting answer. It's just the one that tends to work.
Rick Maggi, Westmount Financial, Financial Advisor (Perth)
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Disclaimer
This article has been carefully prepared by Westmount Securities Pty Ltd (ABN 42 090 595 289, AFSL 225715) for general information purposes only. However, neither Westmount Securities Pty Ltd nor any of its affiliates guarantee the accuracy or completeness of any statements contained herein, including any forecasts. It is important to note that past performance is not a reliable indicator of future outcomes. This material does not consider the specific objectives, financial circumstances, or needs of any particular investor. Therefore, before making any investment decisions, investors should assess the relevance of this information to their individual situation and consult professional advice, taking into account their unique objectives, financial position, and needs.