What long-term returns might we reasonably expect on UK equities? The answer is: we cannot tell, which makes accurate long-term financial planning impossible.
The problem is that we face both risk and uncertainty. My chart below shows the risk. It shows annualised returns on the All-Share index since the dates on the horizontal axis. So, for example, it tells us that since December 1988 the index has returned 4.7 per cent per year after inflation if we had reinvested dividends but just 1 per cent if we had spent them: the figures are before tax.