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Consistent 6-12% Returns?
Old 07-20-2004, 10:55 PM   #1
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Consistent 6-12% Returns?

I get the recommendations on low cost index funds and allocation splits for condition-specific portfolios.

My question is...

Where can one go to see actual return results for these funds?

Are there any (pardon the metaphor here)..."Duke Blue Devil" index funds that are consistently in the 6-10% annual return range?

Regards,
TD
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Re: Consistent 6-12% Returns?
Old 07-21-2004, 04:52 AM   #2
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Re: Consistent 6-12% Returns?

After thirty years of looking I haven't found one.
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Re: Consistent 6-12% Returns?
Old 07-21-2004, 05:13 AM   #3
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Re: Consistent 6-12% Returns?

When your investment horizon is long term (especially retirement accounts in your early years), it is critical to not let higher volatily stray you away from investments that will advantage you in the end. * Volatility is the enemy of an investor with a short-term investment horizon. *

If you're DCA into a single, volatile fund, high volatility can actually work even more to your advantage because you'd be buying more shares when the price is low, and vise versa.

If someone has trouble sleeping at night due to volatile investments, i'd suggest just sending in the check/investment stub, and never looking at its share price for several years. *It'd probably be one of the best favors you ever did yourself.

If you're in or near retirement (less than 7 years), disregard what i said.
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Re: Consistent 6-12% Returns?
Old 07-21-2004, 05:28 AM   #4
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Re: Consistent 6-12% Returns?

Along the lines of previous post you could buy or even benchmark the appropriate Vanguard Target Retirement fund via lump sum or DCA depending on your situation and go from there.
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Re: Consistent 6-12% Returns?
Old 07-21-2004, 11:44 AM   #5
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Re: Consistent 6-12% Returns?

About all I can say is if one is located, and I buy it, the returns will immediately change. Most likely for the worse.

I once bought a fund that had never had two losing quarters in a row, nor a losing year.

It promptly had three losing quarters in a row, and a losing year.

Of course I sold it.

It then had the best year in its history.

Lot of lessons in this short little note...
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Re: Consistent 6-12% Returns?
Old 07-21-2004, 12:11 PM   #6
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Re: Consistent 6-12% Returns?

Quote:
If someone has trouble sleeping at night due to volatile investments....
I think it needs to be said that while higher returns do tend to come from higher-volatility investments, that doesn't mean that high volatility is a predictor of high returns.

In fact, the opposite is true. As a stock or index drops in price, volatility tends to increase. This is called the "leverage effect." The idea is that as prices drop, leverage (the debt to equity ratio) increases, which increases uncertainty and leads to higher volatility.
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Re: Consistent 6-12% Returns?
Old 07-21-2004, 05:40 PM   #7
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Re: Consistent 6-12% Returns?

TD,

Annual Returns for Key Indices (1984-2003) - From Callan Associates.

PERIODIC TABLE OF INVESTMENT RETURNS - From Franklin Templeton, includes Emerging Markets and REITS.

Vanguard Stock Funds - you can get historical returns back to inception of the index fund, or 1984, whichever is later. For example, Vanguard's Small Value Index fund, or S&P 500 Index fund.

As for the 6-10% consistent returns, that's another story. Definitely not 6-10% every year, but a combo of lowly correlated index funds (TSM, SV, EM, EAFE, REIT) could probably deliver 6-10% (pre-tax) long term returns.

- Alec
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