Investment chart from NYT Business section

[martyp]

I thought this would be interesting to folks in ER.

In Investing, It?s When You Start and When You Finish - Graphic - NYTimes.com

 

[Midpack]

Took a few minutes to figure it out. Won't make me sleep any better (or worse), but fascinating chart, thanks for pointing it out!

My parents retired in 1982, very lucky...he would say otherwise.

 

[Peter]

Yes, an interesting chart. It also took me a couple of minutes to figure out the graphics.

One thing that the article didn't mention is that most retirees will have been saving over a period of time, so there will be some smoothing of good and bad time epochs.

Peter

 

[martyp]

I think it conveys a similar message as FIRECalc though without all the input detail. I think it does a good job of showing the variability of a 10-20 yr outlook.

 

[haha]

Ed Easterling, the creator of this chart and other similar very detailed graphics is a member of this forum, although I don't beleive that he has posted in the last several years.

He wrote an excellent book titled "Unexpected Returns". Amazon.com: Unexpected Returns: Understanding Secular Stock Market Cycles (9781879384620): Ed Easterling: Books

Ha

 

[FIRE'd@51]

I looked at my spreadsheet of Ibbotson-Sinquefield data and from the end of 1930 until the end of 1950, the pretax real return was 5.1% per year.

 

[OrcasIslandBound]

I like the chart. However, I do keep in mind what is says about it:
Average real annual return

Includes dividends, average taxes and fees. Adjusted for inflation.


The important item here is that this chart is "Adjusted for inflation". So, a 0% return means that the investment kept up with inflation. I suspect that we can add about 3% to the returns posted on the chart if we wish to remove the adjustment for inflation, or we can add specific amounts corresponding to the actual inflation numbers for each time period. A new chart created by doing this may show that while we did not keep up with inflation in the 1970s, not having been invested may have been far worse over 20 year periods.

 

[P.S.]

wow, this was really interesting and thanks for posting.

 

[Texas Proud]

Interesting chart....


The 60s and 70s seem to be the worst years... even worst than 29 as the years after were 'OK'....

The current range of 2000 to present is looking like the start of the 60s... lets hope it does not continue this trend...

Remember... the darker red is NOT keeping up with inflation... the light red IS... just not 'enough'... everything else is good to go...

 

[NW-Bound]

Yes, an interesting chart. It also took me a couple of minutes to figure out the graphics.

One thing that the article didn't mention is that most retirees will have been saving over a period of time, so there will be some smoothing of good and bad time epochs.

Peter

Yes, I think it portrays the average return over a selected period if one plunks down a lump sum, walks away, then returns some years later to take out the whole sum.

If so, it would not represent what an accumulator would get, or how one in a distribution phase would fare. In addition, if the investment is accumulated in a tax-deferred vehicle like IRA or 401k, it would look better.

Still, the point is luck has a lot to do with it. But as most of us are in roughly the same age group and will face the same hardship if we will be in a tough period, I have company. You know whom misery loves.

 

[Arnie]

Interesting chart. Thanks. Probably my browser, but it seems to be cut off at the bottom right, and I cannot see the expected return for those retiring this year.

 

[NW-Bound]

Eh! For that, you probably need to be a subscriber to someone's news letter to get the deluxe graph.