Anonymous wrote:I kinda get what OP is saying even though I don't see it that way. yes, the old money makes a lot more than any new money you put in. we have about 6 mil in the market now but still continue to put in up to the limits. today's money will make money 30 years down the road.

You’ll dead by then

Anonymous wrote:We ... save around 100k a year ... and have a net worth of 1.5M. The stock market returns 10% on average ... .

Finance bro here. Real return is lower than nominal return. After inflation, U.S. bonds have historically returned only around 1% and stocks around 7%. Current TIPS yields are 2%.

Compound return is around 2% lower than average return. For example, suppose the stock market goes up 20% three times and loses 20% once. Then the average return is (20%+20%+20%-20%)/4 = 10%. But a $100 investment would grow to only $100*1.2*1.2*1.2*.8 = $138, which is only an 8.4% return.

Optimal spending depends on patience and risk tolerance. I understand overspending with kids if you have decades to save for retirement, because you never get that time back.

In the last century, the U.S. stock market might have been a bit lucky, outperforming the U.S. in previous centuries and other most other countries contemporaneously. Wall Street recommends that you underspend in retirement (only 4%) so they can collect fees. On the other hand, you can adapt by saving more if the market performs poorly. You don't want to scrimp for your whole life and then die with massive unspent wealth. To avoid this, you can use Social Security, reverse mortgages, and lifetime retirement annuities.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:It's amazing the number of Americans who have convinced themselves that the US will continue to post amazing returns. No data or theory to back it up, just "history" or because of Murica. I have no idea which country will outperform, but I'm not betting the farm on the US. Here is a different view:

https://youtu.be/1FwgCRIS0Wg?si=n5tQwmehSpOrATfS

Are you shorting the market? If not why not?

The entire recorded history of the S&P 500 is better than any projection you have. You’re just not that smart.

You're a tool if that's extent of your analysis.

Haha - ok. What’s your “analysis” that shows the future performance of the S&P 500?

I'm not the PP but my tool is the quarterly earnings reports and forecasts for these companies which consist of a solid slice of the world economy and are focused on maximizing shareholder value (and run by leaders and boards whose net worths are also tied to that share price, so they personally feel the pain or gain). I'm a senior exec in a public company and our exec leadership team is obsessed with delivering strong quarters for the street.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:It's amazing the number of Americans who have convinced themselves that the US will continue to post amazing returns. No data or theory to back it up, just "history" or because of Murica. I have no idea which country will outperform, but I'm not betting the farm on the US. Here is a different view:

https://youtu.be/1FwgCRIS0Wg?si=n5tQwmehSpOrATfS

Are you shorting the market? If not why not?

The entire recorded history of the S&P 500 is better than any projection you have. You’re just not that smart.

You're a tool if that's extent of your analysis.

Haha - ok. What’s your “analysis” that shows the future performance of the S&P 500?

Anonymous wrote:It's amazing the number of Americans who have convinced themselves that the US will continue to post amazing returns. No data or theory to back it up, just "history" or because of Murica. I have no idea which country will outperform, but I'm not betting the farm on the US. Here is a different view:

https://youtu.be/1FwgCRIS0Wg?si=n5tQwmehSpOrATfS

Just buy VT and chill if you’re pessimistic about the US. Plenty of international exposure.

Anonymous wrote:

Anonymous wrote:It's amazing the number of Americans who have convinced themselves that the US will continue to post amazing returns. No data or theory to back it up, just "history" or because of Murica. I have no idea which country will outperform, but I'm not betting the farm on the US. Here is a different view:

https://youtu.be/1FwgCRIS0Wg?si=n5tQwmehSpOrATfS

Are you shorting the market? If not why not?

The entire recorded history of the S&P 500 is better than any projection you have. You’re just not that smart.

You're a tool if that's extent of your analysis.

I am a middle class person aiming for the top 10% net worth by the time my wife and I retire. I built a relatively complicated spreading to map and project our finances. I am aiming for about $150k in income after taxes. But higher tax brackets, RMD’s and IRMAA definitely hold me back. Once you get a million in pre-tax you have to take all these things seriously to avoid unnecessary expenses.

I know this is all probably small potatoes for most here, but those incessant costs are definitely worth avoiding.

Anonymous wrote:It's amazing the number of Americans who have convinced themselves that the US will continue to post amazing returns. No data or theory to back it up, just "history" or because of Murica. I have no idea which country will outperform, but I'm not betting the farm on the US. Here is a different view:

https://youtu.be/1FwgCRIS0Wg?si=n5tQwmehSpOrATfS

Are you shorting the market? If not why not?

The entire recorded history of the S&P 500 is better than any projection you have. You’re just not that smart.

Anonymous wrote:“If 4-5% was the expectation, then the 4% withdrawal rule in retirement wouldn’t be safe and neither would even 3%.”

This. Also, if they ACTUALLY expected 4-5%, wtf would they be investing in stocks at all? Pre-pay your mortgage, and just buy a bunch of CDs.

I’ll answer this. I use 5 percent for projecting investment growth because I don’t want to plan as if I’ll have more money than I actually do. But that doesn’t mean I expect stocks to actually only return 4 percent, in which case you’re right that paying off my mortgage and buying CDs would be a better strategy.

Based on our current savings rate and our current assets, I’m expecting to have about $7 million when I’m expecting to retire. If I used 10 percent for those calculations, I’d expect to have about $13 million.

Either way, it’ll be plenty, since I anlso haven’t bothered to calculate how much we’ll get from Social Security. And if we find ourselves with more than we expect, I can give it to charity or leave it to our kids. I really don’t see the harm in being more conservative with this stuff.

It's amazing the number of Americans who have convinced themselves that the US will continue to post amazing returns. No data or theory to back it up, just "history" or because of Murica. I have no idea which country will outperform, but I'm not betting the farm on the US. Here is a different view:

https://youtu.be/1FwgCRIS0Wg?si=n5tQwmehSpOrATfS

I don’t know OP’s age, but let’s say you are 45 and have 2 million. If you do the math, at 10% growth each year, that could be over $13 million in 20 years. $13 mill in today’s dollars but still, seems like it would be worth what ~5 mill is now. More than enough for almost everyone, but I would not stop saving more based on that calculation and prior performance, because who knows??

S&P 500 readjusts. So, I do think it’s designed to grow. Of course, if the entire US goes to crap, that’s another thing. Otherwise, 10% feels reasonable.

Anonymous wrote:

Anonymous wrote:I'm not one of the doomsdayers who is going to say Remember 2008? But remember 2008 ha ha.

2008 was nothing. How about 1968 to 1982 or so. It's called "stagflation," and we may well be headed there now.

But in any case, if you didn’t need the funds in that time period, it didn’t matter. We continued to invest during the housing crisis, and we are much better off for it. Of course, if we were retirement age then, it would have been bad. But we aren’t, even now. We have safe investments and then there is some risk to the rest, in varying degrees.

On a good day, I make $50k a day. On a good year, I earned $40k a year. I stopped investing long ago. Never needed a tax deducting making so little. Most of it is in Roth and nearly tax free in an investment accounts. I also stopped working, which was more important that a sports car.
I don't want things. I feel like they hold me down and come with more work than needed unlike money.

As long as we are working we will contribute to 401k because it’s a huge tax advantage. Will stop when we retire, probably around 55.