The average annual return for someone invested 100% in bonds is typically in the low‑ to mid‑single digits, roughly around 3%–5% per year over the long term, depending on the type of bonds and the time period considered. In some decades, especially when interest rates are falling, returns can be higher, while in periods of rising rates or high inflation, returns can be lower or even negative in some years.

Key idea: “average” depends on the bonds

  • Broad bond market indexes (like diversified U.S. investment‑grade bond indexes) have often delivered average annual returns in the low single digits over recent 10‑year periods, in the 2%–4% range.
  • Municipal bond indexes have historically shown average annual returns a bit above 2% over some recent 10‑year windows.
  • Forward‑looking expectations from major investment firms now often project around 4%–5% per year for diversified high‑quality bond portfolios over the next decade, assuming today’s elevated yields persist.

Why returns cluster around 3%–5%

  • Bond returns are anchored by yield : over long horizons, the starting yield of a high‑quality bond index is a strong predictor of its eventual average annual return, as price ups and downs tend to wash out.
  • With many government and investment‑grade corporate bonds currently yielding around the mid‑single digits, long‑term expected returns in that same neighborhood (roughly 4%–5%) are considered reasonable by many analysts.

All‑bond portfolio vs stocks

  • A 100% bond portfolio usually has much lower volatility than a 100% stock portfolio, but also lower expected returns; stocks have historically returned more, at the cost of larger drawdowns.
  • Bonds can still have bad years (for example when interest rates rise quickly), but the long‑term range for broad, high‑quality bond portfolios has tended to stay in those low‑ to mid‑single‑digit annual averages.

Mini example (conceptual)

  • Suppose a diversified bond index starts with a yield near 4.5%.
  • If interest rates move only modestly over the next decade, the realized average annual return might end up close to that 4.5%, plus or minus a bit from price changes along the way.

TL;DR: Over the long run, someone invested 100% in diversified, high‑quality bonds might reasonably expect an average annual return somewhere around 3%–5%, with meaningful year‑to‑year swings but generally less risk and less upside than an all‑stock portfolio.

Information gathered from public forums or data available on the internet and portrayed here.