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Old 06-13-2016, 07:56 PM   #21
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Originally Posted by Ed_The_Gypsy View Post
When I started out, I thought 12% was the norm. Wrong. By the time I wised up it was almost too late. If I get 6% nominal from here out, I will be ecstatic.

I am shooting for 4% w/d rate not corrected for inflation.

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I am using 6% nominal 3% real in my planning currently. I am hoping that is conservative.
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Old 06-13-2016, 08:57 PM   #22
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Yes, it's frustrating when the goalpost moves farther away.
I was lucky--I started investing in the mid-80s, and the expectation of 8% real returns made it easy to stay motivated to put money away every month. It would be harder today, but even more important.

Well, there's this "cheery thought:" When stocks eventually take the plunge from their presently high PE ratios, you'll be able to buy them more cheaply with any money you rebalance and with your continual contribution from your paycheck. And, at that cheap price level, perhaps the dividend yield will go back up to something approaching the historical average.

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Old 06-13-2016, 09:17 PM   #23
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To get a longer perspective look at this site which calculates returns on the s&P 500 or predecessor index going back to 1871. CAGR of the Stock Market: Annualized Returns of the S&P 500, which if you click the include dividends and adjust for inflation boxes suggests a return of 6.86 percent per annum and $1 grew to 15k covering 2 great depressions (1893 and 1929 and a third bad period the panic of 1873). The average return on the web site is listed as 8.53.
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Old 06-14-2016, 12:02 AM   #24
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Since discovering AA, my rate of return has dropped to an average of 5.68%

Figure I'll take out at RMD rate when I hit 70. Hope pension / SSA covers me
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Old 06-14-2016, 05:08 PM   #25
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I too got discouraged. Then I went fishing and even though I didn't catch anything I wasn't discouraged about retirement anymore. Capise?
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Old 06-14-2016, 05:13 PM   #26
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Two guys were out fishing on the river set up the lawn chairs and one guy noticed that nothing was twitching the other guys rod so he reeled it in and said "you ain't got no bait on your hook"

The other guy said "I know"
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Old 06-15-2016, 09:53 AM   #27
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I believe Dave Ramsey uses 12% return to encourage saving and investing vs. spending and borrowing. I think that anyone who quotes a steady 12% return is just trying to sell you something.

I've tried to keep my expectations reasonable so I don't get discouraged. During my accumulation phase (1986 to June 2009), my average annual return was about 2.5%. A non-linear contribution rate and sequence of returns really killed my average rate of return. Not having to withdraw any of my retirement account, it has doubled since 2009.
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Old 06-15-2016, 11:08 AM   #28
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I believe Dave Ramsey uses 12% return to encourage saving and investing vs. spending and borrowing. I think that anyone who quotes a steady 12% return is just trying to sell you something.
Just 1 of my problems with DR. I'd rather have real numbers

Eventually compounding takes over
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Old 06-15-2016, 12:01 PM   #29
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12% might be a bit high but not totally out of whack if you use growth funds. A 100% stock fund has returned 10.1% on average since 1926 according to Vanguard.

https://personal.vanguard.com/us/ins...io-allocations
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Old 06-15-2016, 12:04 PM   #30
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While I certainly wish that future returns were higher, I would not go so far as to say I was discouraged. It does help that inflation is low, so part of your return reduction (nominal to real) is better than your statement. I started saving at 21 and my spending is under control, so I will manage with a 2-2.5% WR. Good luck to you.
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