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Rick Ferri's latest 30-year forecast
Old 03-30-2016, 07:08 AM   #1
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Rick Ferri's latest 30-year forecast

Not a be all end all, but another data point for consideration. Won't be a surprise to most investors here.
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Old 03-30-2016, 09:11 AM   #2
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If I apply his nominal returns to my target AA I get a weighted average of 6.0% and I used 5.5% in my deterministic retirement projections so I feel fine. Also, I assumed 3% inflation so 2.5% real and he would be at 4% real with 2% inflation.... so that feels even better!
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Old 03-30-2016, 09:24 AM   #3
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If I apply his nominal returns to my target AA I get a weighted average of 6.0% and I used 5.5% in my deterministic retirement projections so I feel fine. Also, I assumed 3% inflation so 2.5% real and he would be at 4% real with 2% inflation.... so that feels even better!
I sure hope Ferri is right!

With my super-conservative AA, it looks like around 3.8% return without considering inflation. I am fine with spending 2% or less, so things are looking good here, too.
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Old 03-30-2016, 11:02 AM   #4
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I wonder what he predicted in 1986?
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Old 03-30-2016, 11:16 AM   #5
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I'm curious how they figure to get 2.6% real returns over the next 30 years from 30-yr TIPS when those bonds currently only yield 0.8% real. Seems if you buy 30-yr TIPS, you're stuck with a 0.8% return for the next 30 years.
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Old 03-30-2016, 11:33 AM   #6
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I like Ferri, but view any and all forecasts as financial porn.


"The only function of economic forecasting is to make astrology look respectable".

- John Kenneth Galbraith
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Old 03-30-2016, 04:32 PM   #7
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Nice, thank you. Ferri is a real optimist. Hope he's right

Guess Ferri also doesn't believe that higher rewards also always involves more risk.

E.g. foreign gov. bonds 2.4% with a deviation of 9, while 30y TIPS have 2.6% also with 9.

Curious what a plot of returns vs. std deviation would look like.
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Old 03-30-2016, 05:00 PM   #8
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I wonder what he predicted in 1986?
Exactly. Even 1996 would do.
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Old 03-30-2016, 05:03 PM   #9
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Curious why he left out commodities, currencies, and Au. Ain't like the US$ is a constant.
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Old 03-30-2016, 05:45 PM   #10
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Even optimist like me with 100% in equities finds those numbers a bit too good....but certainly possible.
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Old 03-30-2016, 07:30 PM   #11
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Does a Financial Advisor get more (or wealthier) clients if they offer a better outlook?
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Old 03-31-2016, 05:22 AM   #12
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Typically what works best is underpromise, and overdeliver.

Unless you make money solely from writing stories. Then we like happy endings.
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Old 03-31-2016, 08:49 AM   #13
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Nice, thank you. Ferri is a real optimist. Hope he's right
The returns certainly look optimistic to me, but all I'm going on is the number of furrows on Janet Yellen's brow. Still, my plan is to be able to fund retirement with very low returns.
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Old 03-31-2016, 09:11 AM   #14
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Typically what works best is underpromise, and overdeliver.
True, in most lines of work. But if it's hard to objectively assess results (or the results can be explained with sufficient credibility), then maybe overpromising works for long enough to make it worthwhile.

If an FA can match or outperform the indexes, he's probably going to keep customers, even if those indexes don't match previous, overly-rosey, predictions. The important thing is to get them to sign on initially.
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Old 03-31-2016, 03:39 PM   #15
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Looks like Ferri's a lot more optimistic than I am.
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