Good luck with your quest. Seriously.
If you’re trying to figure out what kind of return you can expect over a 40-year period, basing your plan on a single 40-year period that includes the longest bull market in history is more than a little unsafe.
If you research the truly long-term returns of the US stock market (say 1926 to date), you’ll find that they were averaging about 9.5% to 10% a year, with inflation running between 3% and 3.5%. That’s why historic returns are considered closer to 6.5% or at most 7% a year.
If you want to use historic returns for a 40-year period, I suggest you use data from that near-century-long record, and average all 54 rolling 40-year periods to see the range of average returns you might expect.
Beyond that, current research expects forward looking returns to be lower than those of the past, so I think 6% inflation-adjusted returns are likely the best you should plan on. As you alluded to, this doesn’t mean that’s what returns really will be each year, or even on average. It’s simply that counting on better than that sets you up for a high likelihood of failure.
By the way, reducing your 40-year target by a factor of 2 translates to reducing your expected annual returns by just 1.7%. If you start with the expectation of 11.5% average annual returns and reduce your target by 1.7% a year, you’re still planning on a 9.6% annual return, which is far too high for safety.
Indeed, going from an expected 11.5% annual return to a 6% average return means your final result will be lower by a factor of more than 7.5. That turns your $80k to less than $11k.
Having said all that, by no means would I discourage you from planning to invest, and even from investing as aggressively as you feel comfortable doing. My comment came from the great disappointment I felt when after reading the huge promise of your title, I saw there was nothing to justify that promise.
As for how I plan to create my own wealth, don’t fret. I’ve increased my net worth 10-fold in the last decade, and expect to increase it another 3.5-fold in the next 7-8 years, reaching and exceeding my financial freedom target.
