In my new book, Whispers from a Quiet Investor, I spend a lot of time talking about the power of compound interest. With the right mindset and enough time, small investments can snowball into real wealth. Many of the examples in the book use annual returns of 7% to 8% to illustrate this concept. What I didn’t do, however, is tell you exactly how to earn those kinds of returns.
That was no accident.
Okay, okay—maybe I was saving that nugget for the next book... just kidding! In this article, we’ll get into the real question: What types of investments can realistically help you earn around 8% per year?
Which Investments Historically Average Around 8%?
Let’s be honest: there’s no such thing as a guaranteed 8% return. However, there are several investment strategies and asset classes that have historically averaged close to that figure—sometimes even higher—if held over the long term.
1. U.S. Stock Market Index Funds
If you want simplicity and performance, index funds are your best friend. A broad market ETF like Vanguard’s VTI or the S&P 500-tracking SPY has historically returned 7% to 10% per year when held long term. It's passive, low-cost, and diversified—precisely what you want in a core holding.
2. Real Estate (or REITs)
Owning rental property can provide substantial returns via rent and appreciation, especially when mortgage leverage is used wisely. Don’t want the landlord headaches? Invest in Real Estate Investment Trusts (REITs) like VNQ instead. Many offer yields in the 4–8% range, along with additional growth.
3. Dividend Growth Stocks
Think of companies like Coca-Cola, Johnson & Johnson, or Procter & Gamble. These companies offer steady dividends (typically around 2%–4%) and consistent price growth. Together, they can push you close to an 8% total return, especially when reinvested over time.
4. Covered Call Income Funds
Want income and exposure to equities? Funds like JEPI or QYLD utilize options strategies to generate monthly income, often yielding returns of 7%–10%. While this may cap some growth, it adds consistent cash flow.
5. Private Lending / Peer-to-Peer Platforms
Lending directly to businesses or individuals—through private credit funds or online platforms—can net you returns of 7% to 12%. However, remember that the risks are significantly higher, and these assets are often illiquid.
6. Private Equity or Small Business Ownership
Investing in private businesses can offer big returns. The catch? They’re often riskier, require more involvement, and take years to pay off. This is best left for those with experience—or a high tolerance for risk.
7. A Balanced, Multi-Asset Portfolio
You don’t need to go all-in on any one asset. A smart blend—like 60% stocks and 40% bonds, enhanced with income-generating and global assets—can realistically average 8% over time. The trick is maintaining diversification and staying invested.
Building a Passive Portfolio That Targets 8% Returns
Let’s say you want to start with $10,000 and grow it over 10 years with a mostly hands-off strategy. Here’s a model portfolio that fits a moderate risk profile and aims for ~8% returns.
🔹 Portfolio Blueprint
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40% U.S. Total Stock Market ETF (e.g., VTI)
Your growth engine. This covers thousands of U.S. companies across all sectors and sizes. -
20% International Stock ETF (e.g., VEU)
Adds global exposure—important for diversification and capturing emerging market potential. -
15% REIT ETF (e.g., VNQ)
Brings in real estate exposure and reliable income through dividends. -
15% Covered Call ETF (e.g., JEPI)
Generates monthly income and adds a defensive layer during market turbulence. -
10% High-Yield Bonds (e.g., HYG or VWEAX)
Adds income and some downside cushion in volatile markets.
💡 Why this works: You’re combining equity growth, real estate income, and alternative income strategies in one portfolio. With rebalancing once a year, you’ll maintain a healthy risk-reward balance.
What Happens Over 10 Years?
If you stick to this plan and the portfolio averages an 8% annual return, your $10,000 could grow to approximately $21,589 without requiring any additional contributions.
Now, if you decide to contribute even a modest $100/month, you could grow that account to $35,000+ over 10 years—all passively.
Want to Use a Roth IRA?
Great idea. A Roth IRA lets your investments grow tax-free, and you’ll never pay taxes on withdrawals in retirement. Here’s how to use this strategy inside a Roth:
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Open a Roth IRA with Vanguard, Fidelity, Schwab, or M1 Finance.
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Contribute up to $7,000 per year ($8,000 if 50 or older) for 2025.
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Use the same portfolio mix as above inside the account.
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Enable dividend reinvestment for automatic compounding.
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Rebalance annually to stay on track.
With consistent yearly contributions, an 8% return could grow your Roth into six figures in just over a decade, tax-free.
Final Thoughts
Chasing high returns usually leads to higher risk. But aiming for 8% using a diversified, disciplined approach? That’s both realistic and repeatable. The real key is time, patience, and consistency.
And if you want the full breakdown of how compounding works its magic, go grab Whispers from a Quiet Investor. Inside, you’ll find timeless lessons on how to build wealth quietly—and securely—over time.
Whispers from a Quiet Investor: The Answer to Successful Investing through Cunning Intelligence. Kindle $9.99, Amazon paperback $10.99.
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