A: You wouldn't believe the deluge of reader e-mail I got when I mentioned a 10% average annual return in a recent Ask Matt column. It was an interesting response, because I was using 10% mainly for demonstration purposes.

But I stand by 10% as a reasonable expectation for returns for investors that have a diversified basket of stocks. And I know, it doesn't seem remotely possible, given how ho-hum returns were for large-cap stocks in 2005.

Many investors have been frustrated with the market's recent lackluster returns. But, statistics show that large-cap stocks (measured by the Standard & Poor's 500) have produced 10.4% yearly returns on average over the past 79 years through 2004, according to data from IFA.com.

Yes, there will be years below 10.4% and years above 10.4%, but the average (geometric mean to be precise) is 10.4%.

Think of it this way: Flip a coin. I have no idea if the next flip will be a heads or a tails. And yes, it's possible you might flip a heads three, four or even five times in a row. But, if you keep flipping over and over, on average, you will get a heads 50% of the time and a tails 50% of the time. This law of statistics is the reason why casinos in Las Vegas and insurance companies are so profitable.

What about inflation? Certainly, the declining purchasing power of the dollar over time does erode returns. To be exact, the 10.4% annual return of the S&P 500 is actually 7.2% if you adjust for inflation, according to data from Standard & Poor's.

But keep in mind that just investing in the S&P 500 is not adequate. You need to add other asset classes to your portfolio, including small-cap stocks, which have returned 9.1% returns on average a year even after inflation. Foreign stocks and emerging markets stocks, which have a place in many investors' portfolios, have done even better.

But how do you put this truth to work for you? The secret is staying invested in a low-cost basket of properly selected index funds. To get maximum returns for the lowest amount of risk, you'll want to be invested in not just large-cap stocks but also large-cap value stocks, small-cap and small-cap value funds. Depending on your age and taste for risk, you may also want some foreign exposure.

To be sure, you'll want to use online tools or study to get your ideal asset allocation. But if you do this correctly and carefully, statistics tell us properly diversified portfolios can achieve 10% or greater returns over the long run. Again, the longer you are invested the greater chance you have at actually earning the expected return.

Try not to get frustrated. I know it has been a difficult five years for large-cap stocks (keep in mind, though, that small and foreign stocks have done very well). But having a sound plan and sticking with it is the only way to achieve financial success.

Matt Krantz is a financial markets reporter at USA TODAY. He answers a different reader question every weekday in his Ask Matt column at money.usatoday.com. To submit a question, e-mail Matt at [email protected].