What’s Next for Your Investments? 5 Key Predictions from Goldman Sachs’ 10-Year Forecast

Updated February 2025

Navigating the daily deluge of market news, geopolitical events, and economic data can obscure the structural forces that truly drive long-term returns. How can an investor confidently set a course for the decade ahead?

5 Key Predictions from Goldman Sachs' 10-Year Forecast.pdf

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The Goldman Sachs 10-Year Outlook report is a valuable tool designed to cut through that noise. Instead of focusing on cyclical trends, it analyses the deep, structural drivers -like nominal growth, profitability, and valuations; that are expected to shape market returns over the long haul.

This post distils the five most surprising and impactful takeaways from the report to help you think strategically about your investments for the next decade.

Goldman 10 Year Outlook.pdf

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1.The US Market Might Not Be the Star Player of the Next Decade

While the US stock market has dominated global returns in the recent past, the Goldman Sachs forecast suggests a significant shift in leadership may be on the horizon.

The report projects a 10-year annualised return of +6.5% for the United States, notably lower than the forecast for the global market at +7.7% annually in USD terms.

Why the US May Underperform

A key component of this relative underperformance is tied to currency dynamics, as the report forecasts a weakening US dollar that will act as a tailwind for international investments.

To put the US forecast in historical context:

• A 6.5% return ranks in just the 27th percentile of its performance since 1900.

• This signals a potentially prolonged period of below-average results.

• This challenges the assumption that continued US tech leadership guarantees market outperformance.

The report explicitly warns that “Extreme current US equity market concentration” is a major risk for investors.

2. Look East: Emerging Markets Are Set to Lead the Pack

If the US is expected to underperform, where does the report see the strongest returns?

Why Emerging Markets and Asia Lead

The answer is clear: Emerging Markets and Asia.

Goldman forecasts:

• +10.9% 10-year annualised local-currency return for Emerging Markets

• +10.3% for Asia ex-Japan

Crucially, when currency effects are included, the forecast for EM rises to a remarkable:

➡️ +12.8% annually in USD terms

This strong number comes from:

• +10.9% local-currency return

• +1.7% currency tailwind

The expected outperformance is driven by:

• Strong EPS growth

• Especially in China and India

• Structural reforms improving market efficiency and shareholder returns

Goldman’s Direct Advice to Investors

“Diversify beyond the US, with a tilt towards Emerging Markets. We expect higher nominal GDP growth and structural reforms to favour EM, while AI’s long-term benefits should be broad-based rather than confined to US Technology.”

3. Don’t Panic About High Valuations - But Don’t Ignore Them Either

A central tension in the forecast is today’s high valuations. Global equities trade at ~19x forward earnings, undeniably high by historical standards.

Classic Models Suggest Lower Returns

Tools like the CAPE ratio imply future returns “below 5%.”

But Goldman Offers a More Nuanced View

While high valuations are a headwind, they no longer dictate the whole story.

Goldman argues that valuation-return correlations have weakened due to:

• Shifts in index composition

• Structurally higher margins

• Sustained return on equity

• Improved corporate efficiency

Why Today’s High Valuations Don’t Guarantee Low Returns

Changes in global company composition mean:

• Higher long-run margins

• Better profitability profiles

• More capital-light businesses

These trends offset the classic “high valuation = low return” signal.

4. Earnings Are the Engine; Valuations Are the Brakes

In an era dominated by hype cycles and macro noise, Goldman returns to fundamentals:

Earnings Growth Drives Long-Term Returns

Goldman forecasts:

➡️ Global earnings (including buybacks) to compound at ~6% annually.

This is the core engine of returns.

Dividends Add Stability

Dividends combined with earnings form the majority of long-term investor returns.

Valuations Create a Small Drag

Goldman expects valuations to:

• Ease from current highs

• Contribute negatively to returns

• Act like a brake rather than a collapse risk

This reinforces the timeless principle:Long-term wealth is built on profitability, not market mood.

5. The US Dollar’s Quiet Influence on Global Returns

Most investors overlook currency; yet it matters profoundly.

USD Weakness Will Boost International Returns

Goldman expects the US dollar to decline over the next decade.

A falling dollar means:

• Gains on non-US assets increase when translated back into USD

• Historically, USD weakness has aligned with non-US outperformance

Goldman estimates USD depreciation will:

➡️ Add ~0.6% per year to global total returns

Timing Will Matter

The FX team expects:

• The dollar decline to be front-loaded, mostly within 12 months

• Creating a short-term tailwind for international equities

This boosts the case for non-US diversification.

What This Means for Everyday Investors

1. Diversify Beyond the US

The world’s return engine is shifting east; portfolios must reflect that.

2. Increase Exposure to EM & Asia

Not recklessly but meaningfully. Start small and increase with discipline.

3. Use Financial Tools to Model Your Own 10-Year Growth

Use the interactive tools at:👉 https://www.campaignforamillion.com/tools

Use them to explore:

• 10-year return projections

• Sequence-of-returns risk

• Pension outcomes

• Global allocation impacts

4. Build a Long-Term Plan and Stick To It

The winning investors of the next decade will be the patient ones.

A Shifting Investment Landscape

The Goldman Sachs 10-year forecast paints a picture of a world evolving in structure and leadership.

Key themes include:

• Solid but unspectacular global returns

• A geographic shift from US to EM and Asia

• Earnings as the central driver of returns

• Valuations and FX as subtle but important forces

As the market landscape shifts away from US dominance, investors must ask:

How does this 10-year outlook challenge or confirm your own investment strategy?

Disclaimer: This article is for general information and education only and does not constitute investment advice or a recommendation to buy or sell any financial product. Past performance is not a reliable indicator of future results. Forecasts are not guarantees and may change. Always consider your personal circumstances and seek guidance from an FCA-authorised adviser if needed.

Alpesh Patel OBE

www.campaignforamillion.com