What I would write if I were a journalist

If I had access journalist-calibre resources and research skills, I would do a search of as many media sources as humanly possible to find every instance of "Assuming X% interest", "Assuming an X% return" or synonymous in personal financial advice articles written in, say, the past 10 years before the current economic crisis.

Why? Because I have a hunch that the interest rate assumption was most often 10%. I'd conservatively estimate that the average was close to 8%, although I wouldn't be at all surprised if it approaches 10%.

So why is this relevant? Because, since the economic crisis, especially in reference to the Madoff thingy, I've seen commentators saying that people should have seen that something was wrong because returns were so high, citing returns of around 14%. I can google up this Margaret Wente article and distinctly remember hearing it discussed on Metro Morning around the same time (that would be either Andy Barrie or Michael Hlinka), but I know I've seen it elsewhere too.

Now, I would never have invested in the Madoff thingy because I have no risk tolerance and because I wouldn't have understood how it was supposed to have worked. However, I would have considered those factors personal faults, not indications that there was something wrong with the investment. And despite the fact that I'm so excessively cautious about investment, it never would have occurred to me that the 14% return was a sign something must be wrong. Even if I'd known it was significantly exceeding market averages, I would have just assumed that these people know how to invest properly.

Why would I have thought this? Because I've heard the phrase "Assuming 10% interest" bandied about so often. I've seen it casually and thoughtlessly mentioned in so many financial advice articles that I'm always surprised when I see a more sensible (but still higher than I could ever achieve) 7% used instead. In literally every conversation I've ever been in about what we'd do if we won the lottery, someone would mention investing some portion of the winnings at 10% returns and living off that forever. When I've asked people how, exactly, you get 10% returns, my question has been waved off with an implication that if you know how to invest like a proper grownup, it's easy.

Now, I do see that 10% makes the math easy. However, it doesn't appear to be especially realistic. But I wonder if its pervasiveness as an example led people to take on more financial risk than they can handle with the assumption that they should be getting that level of returns?