OldShooter
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Well, as I tried to point out in post #11, I don't think using one's highest accuracy estimate for future planning is wise and if I understand you, that sounds like what you are doing.Am I the only one that thinks many folks % returns are excessively (perhaps conservatively) low? My research has always shown long term nominal returns (not accounting for inflation) of close to 10% for the market, with real returns being closer to 7% (net of inflation). But I'm certainly no pro
I typically use 7% (net of inflation) in my calculations, under the assumption that if I have $XYZ today and contribute $ABC per year for 10 years earning 7% annually, I will have $ZZZ 10 years from today, in today's dollars (not the dollars of 2029). In reality, my stash will be larger but by using a real return, it lets me know what I will be able to spend 10 years from now, in today's dollars.
Or are my assumptions totally whack??
The reason is that the consequences of a "miss" are asymmetric. Underestimating is not really a problem, but overestimating returns could result in running out of money. Stirring inflation into the pot (not that it isn't important) is the same -- consequences of an error are assymetric.
So IMO we can play with these numbers, consult crystal balls, fortune tellers, and astrologers, but in the end we had better be conservative with our planning numbers. "Excessive conservatism" is probably judged only in the eye of the beholder.