Talk to any investment adviser and they will tell you that nearly all their clients come in with one goal: to make as much money as possible without taking any risk.
Like the proverbial free lunch, it isn't happening.
Needed returns don't match risks
But investors still have unrealistic goals about what their investments can do and how much risk they need to take to get the returns they want, according to a new survey by Natixis Global Asset Management.
Americans have exceedingly high expectations for future investment returns, the survey reports. According to Natixis, survey respondents need average yearly returns of 9.80 percent above the rate of inflation to meet their future financial needs.
No matter which yardstick you use to measure inflation, 9.80 percent above the historical average rate of inflation is a lot: Investors need returns of at least 12.80 percent. The Natixis survey puts the historical average inflation rate at about 4 percent, but around 3 percent is often used.
The geometric mean return, or the compound average growth rate, of the S&P 500 since 1928 through 2013 was 9.55 percent. From 2004 to 2013 the geometric average was 7.30 percent, according to the New York University Stern School of Business.
The geometric mean accounts for compounding across multiple holding periods. It's always lower than the arithmetic average.
People aren't all in stocks
It's a good bet that most individual investors don't put all their investment dollars into the stock market, though.
The majority of participants in the Natixis survey, 56 percent, said that they are only willing to take minimal risks to achieve higher returns.
Not surprisingly, most investors, 54 percent, say they don't have a financial plan in place. And 79 percent rely on gut instincts when making investment decisions.
There were encouraging signs though: 82 percent of those surveyed said they were willing to set target investment returns based on their own goals, independent of market returns.
"They would be happy to achieve the rate of return based on their goals, even if they underperformed the market," says David Giunta, president and chief executive officer of Natixis Global Asset Management.
For many people, extra savings will have to make up a large part of their retirement shortfall as few investments can provide the level of returns needed.
Do you plan to save extra hard or are you willing to take some risks with your retirement portfolio?
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Senior investing reporter Sheyna Steiner is a co-author of "Future Millionaires' Guidebook," an e-book written by Bankrate editors and reporters. It's available at all the major e-book retailers.