What % return would you assume for next 20-25 years
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Anonymous
| All our investments are currently in a mixture of broad index funds or target retirement date funds of 2050 or 2055. If I’m using online calculators to project over the next 20-25 years what would assume for an average annual return? |
Anonymous
| 7 |
Anonymous
| 4-6% |
Anonymous
| 2-3% real |
Anonymous
| 7%, but inflation will be 4% min, so real return of 3%. |
Anonymous
PP here, sorry, you already cleared it up sorry for repeating. |
Anonymous
| You should be looking at best and worst case scenarios. Probably ranges from 0-10%. Realistically, 5-6% isn't a terrible number |
Anonymous
| less than 5, after tax close to 3. Read what Jack Bogle said on this very topic going forward. Just rolling with an S&P index will not beat inflation |
Anonymous
I've always assumed a real return of 2-3% (Nominal return minus inflation). I use 2% for planning purposes. I assume a 5% return for my investments and a 3% growth on expenses. This way I'm pleasantly surprised at the end of every year my investments grew more than 5% and expenses grew less that 3%. I also assume a reset - a percentage by which my entire portfolio gets reduced by - at least once every 10 years from which the market never recovers. On Jan 1, 2022 my model had it at 50% given the length of time that had gone by without a proper bear market. After the recent bear market, I've changed that to 20% (to account for a Black Swan) for 2023. This will gradually be increased to 50% over the years. If '23 ends up being a up year, a bull market will be in place and the market will march on for years. I will be increasing the reset % to 25, 30, 35, etc. all the way to 50% over time. The model itself takes us to when we are 100+ years of age and the objective is to show a positive net worth at the end of that period given the above assumptions. Another note. Get out of Target date funds. They are charging you additional fees to manage that mix. Look up the target date fund's investment mix at the beginning of each year and rebalance yourself (i.e. Buy a market index, bond index, etc. at the same % allocation as the TG funds). Cheaper. TL; DR - Plan conservatively - Assume 5 or 6%. Be positively surprised; Avoid target date funds. |
Anonymous
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The advice to avoid Target date funds because of high fees is outdated/fund-specific.
Both Vanguard and Fidelity offer target date funds with expense ratios of 0.08% which is low enough for anyone (leaving aside that investing in TDF may have other advantages for some people). |
Anonymous
I'm not aware of anywhere that Bogle said inflation would outpace the S&P500 long term-- that would suggest a very bad economy and I think the Fed would do everything in it's power to avoid that. |
Anonymous
np - if i remember correctly he said return on investment next decade will be nothing like it's been. i remember thinking, this guy is crazy what does he know... LOL. He was right! |
Anonymous
Yes, I have my 401K in Vanguard 2040. The 0.08 percent is worth it not to have to ever worry about rebalancing etc. |
Anonymous
Yep, for the US total market. I have more confidence in value and international, as they have been lagging for a long time. |
Anonymous
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inflation is old news..forward looking at it will be quite modest.
Why are you assuming it will be 4% for the next 20 years..no one has a clue Historically, the S&P is around 9-10 depending on the time frame. 6-8 is reasonable and fair. Anything less that than and people are acting out of fear/short term bias. People said this in the 70s, 80s, 90s, etc...you know what? the S&P has still grown exponentially. |