What Wall Street’s 10-Year Stock Market Forecasts Mean for Income Investors

If you’re an income-focused investor planning for retirement or building wealth, the next decade may look very different from the last. Major Wall Street institutions—including Goldman Sachs, Vanguard, J.P. Morgan, and BlackRock—are projecting significantly lower stock market returns over the next ten years compared to historical averages. These stock market forecasts represent a fundamental shift in the investment landscape.

For investors who depend on portfolio income or seek stable, predictable returns, this shift demands a serious reassessment of traditional investment strategies. In this article, we’ll break down what the experts are forecasting, why it matters, and how alternative investments like mortgage notes can help you achieve your income goals even in a lower-return environment.

The Expert Consensus: Lower Stock Market Returns Ahead

When some of the world’s most sophisticated investment firms all arrive at similar conclusions, it’s worth paying attention. Here’s what the major institutions are forecasting for stock market returns over the next decade (sources include Vanguard’s Economic Outlook and BlackRock’s Capital Market Assumptions):

Why Are Experts Predicting Lower Returns?

Several key factors are driving these more conservative forecasts:

1. Elevated Valuations

Stock valuations are currently high by historical standards. When price-to-earnings ratios are elevated, future returns tend to be lower as valuations normalize over time. Markets that start expensive rarely deliver above-average returns.

2. Modest Earnings Growth Expectations

Corporate earnings growth is expected to moderate compared to the exceptional growth seen in recent years. Without strong earnings expansion, stock prices have less room to rise dramatically.

3. Rising Interest Rates Environment

Higher interest rates make bonds more attractive relative to stocks and increase the discount rate used to value future earnings. This creates headwinds for equity valuations and can compress stock market multiples.

4. Economic Uncertainty

Geopolitical tensions, inflation concerns, and potential recession risks all contribute to a more uncertain economic outlook, which typically results in more volatile and lower average returns.

What This Means for Income Investors

If you’re investing for income—whether for retirement, passive cash flow, or wealth preservation—these lower return expectations create significant challenges:

• Reduced Portfolio Growth: A 4–7% return may not keep pace with your income needs or inflation over time
• Limited Dividend Income: Lower stock returns often correlate with modest or stagnant dividend growth
• Increased Volatility Risk: Unpredictable market swings make it harder to plan withdrawals or rely on consistent income
• Sequence of Returns Risk: For retirees drawing down portfolios, poor early returns can permanently damage long-term wealth

Traditional 60/40 portfolios (60% stocks, 40% bonds) may no longer provide the income and stability that investors have historically relied upon. Bonds, while safer, are also offering relatively modest yields in the current environment.

The Case for Mortgage Note Investing

This is where alternative investments like first-lien mortgage notes become compelling. Mortgage notes offer a unique combination of attributes that can help income investors navigate a lower-return stock market environment:

Key Benefits of Mortgage Note Investing

How Mortgage Notes Compare in Practice

Let’s look at a practical comparison. Assume you’re investing $100,000 and evaluating your options:

Over a decade, the difference in total returns is substantial. But equally important for income investors is the consistency and predictability of those returns. Mortgage notes provide contractual monthly payments, while stock dividends can be cut and portfolio values can swing wildly year to year.

Who Should Consider Mortgage Note Investing?

Mortgage note investing is particularly well-suited for:

• Retirees and Pre-Retirees: Those who need reliable monthly income and can’t afford significant portfolio volatility
• Conservative Investors: People who want equity-like returns without equity-like risk
• Diversification Seekers: Investors looking to reduce correlation with stock and bond markets
• Income-Focused Investors: Anyone prioritizing cash flow over capital appreciation
• Real Estate Enthusiasts: Those who like real estate but don’t want the responsibilities of being a landlord

Whether you’re a passive investor seeking hands-off income or exploring alternative investment strategies, Labrador Lending offers solutions tailored to different investor types.

The Labrador Lending Approach

At Labrador Lending, we specialize in first-lien mortgage note investments through our Integrity Income Fund (IIF). Our fund provides individual investors access to professionally managed mortgage note portfolios without requiring them to source, underwrite, or service notes themselves.

Integrity Income Fund Highlights:

• For Accredited Investors: Fund is available to accredited investors only
• Target Returns: 8–10% annual preferred returns
• Monthly Distributions: Consistent cash flow deposited to your account
• Professional Management: Experienced team handles all due diligence, servicing, and asset management
• Diversification: Fund invests across multiple notes and geographies to spread risk
• Real Estate Backing: Every note is secured by physical property
• Commitment Period: Short one-year minimum investment period

Our approach focuses on first-lien positions, meaning we hold the senior debt position on the property. This provides the strongest level of protection and priority in the event of borrower default. Download our complete Fund Overview PDF to learn more about our investment strategy and due diligence process.

Five Key Takeaways

Conclusion

The investment landscape is shifting. With major Wall Street firms projecting significantly lower stock market returns for the decade ahead, income investors need to think differently about portfolio construction and return expectations.

Mortgage note investing represents a compelling alternative for those seeking higher, more predictable income streams backed by real assets. While no investment is without risk, first-lien mortgage notes offer a unique risk-return profile that can complement traditional portfolios—or serve as a core holding for income-focused investors.

As you plan for the next decade, consider whether your current investment strategy is positioned to meet your income needs in a lower-return environment. The experts have spoken clearly about their expectations. The question now is: how will you adapt?