Rate of Return

R

Razor Hog

Confused about dryer sheets
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Jul 15, 2018
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What is your percent rate of return on your retirement for the last 10 years? The reason i asked the question is i have opened a retirement account with TD Ameritrade. I really like the guy. I plan on rolling my company retirement over there when i retire. The only red light is he told me i could expect a 3% return on my retirement. That sounds low. What do you guys think?
 
Run! That is after he takes his cut and puts you into funds he gets a commission on.
You can get 2% on a CD, and only guarantees 1% more:confused:
 
Vanguard says 11.4% for 7/1/09 through 6/30/19. Quicken reports 12.63% over the same time frame. I am a LTBH of low-cost broadly diversified index mutual funds and have been over 90% invested in stocks during that entire time frame.

3% sounds low to me too, but if you were invested very conservatively and he was referring to a real rate of return (i.e., subtracting out inflation), then it may or may not be reasonable.
 
My ROR for the last 10 years has been about 8.8%. Nominally 55/45, but it has been +/- 5 at times.
 
Sounds low.
Ask him for details on what AA he plans for you. Then folks on this site can assist with historical returns based on your investment profile to match up with his 3% expectation.
You can then take it from there.
 
Razor Hog said:
What is your percent rate of return on your retirement for the last 10 years? The reason i asked the question is i have opened a retirement account with TD Ameritrade. I really like the guy. I plan on rolling my company retirement over there when i retire. The only red light is he told me i could expect a 3% return on my retirement. That sounds low. What do you guys think?
Click to expand...

My 10-year return is 10.7% per Vanguard... probably a tad high as I have some money outside Vanguard in 3% CDs... I'm guessing 9.5-10% with that money mixed in. As 60/40 blend of Total Stock and Total Bond, rebalanced annually was 10.4%.

3% going forward is way too low IMO, but it depends on what your asset allocation is... for a high bond allocation then 3% might be in the ball-park but for anything with 30-70% equities then my view is that 3% is low.
 
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14.7 % over 10 yrs for a Vanguard SP500 Account with a bias to value stocks. A straight SP500 allocation or a bias to growth would’ve done better. Most of this period the return on this account was approx 8% as I recall. My balanced portfolio (50% equities) has done about 7% over 10 yrs.
 
10.9% for 10 years per Vanguard. That's about 1/2 my stash, the rest in my 401K which only reports rate of return for the last 5 years at 6% (I keep my bonds there).
 
Depends on what your Investment policy is. At least he isn't over promising. Sounds like an honest guy.
 
Razor Hog said:
What is your percent rate of return on your retirement for the last 10 years? The reason i asked the question is i have opened a retirement account with TD Ameritrade. I really like the guy. I plan on rolling my company retirement over there when i retire. The only red light is he told me i could expect a 3% return on my retirement. That sounds low. What do you guys think?
Click to expand...
Sounds about right for a 3% Certificate of Deposit.
What asset allocation and investments proposed?
 
Did he say or mean 3% over inflation? That might be more realistic.

Matching the past 10 years isn't realistic. I wouldn't trust anyone who said they could.

I'd be a lot more concerned about whether his strategy matches yours (or your risk profile, if you don't really know your strategy), and what his fees are.
 
The last 10 years provided extraordinary market returns. That does not promise future returns will be the same. It seems more likely not.
 
I currently am fully invested in T-Rowe Price/Brown Advisory LCG R6 fund. 25.49% YTD so far, and averaging 17.01 over the last 10 years, although I didn't invest until early last year.

T. Rowe Price/Brown Advisory
LargeCap Growth I R6 Fund , [9], [17], PLCGX -
16.1500000 25.49 7.00 4.38 13.23 21.05 14.29 17.01 6.78 11/25/2014 0.61% 0.59%
 
What allocation are you planning on for you investments? This will effect your results. Also 10 years today is likely not a great reference point. Go back 11 years will make a bit of a change as you won't be as close to the 2009 bottom.

What would you do if your investments dropped 20% in a month?
 
In my IRA, the annual rate of return for the last 10 years is 9.6%, and the AA has gradually gone from 55/45 to 45/55, consisting of an S&P500 fund and an intermediate-term, investment-grade corporate bond fund. In my taxable account, the same 10-year rate of return is 5.7%, and the AA is more bond-tilted at 35/65 because its monthly dividends are what I have been using to pay my expenses in ER since late 2008.
 
3% AFTER withdrawals would be great. Is that what he meant?
 
As some posters have cautioned, the rate of return in the last 10 years was quite high, and should not be expected to continue.

Per Morningstar, a surrogate for the S&P, VFINX, has the following returns.

June 1, 2009 - June 1, 2019: 254.9% or 13.5%/yr compounded
June 1, 1999 - June 1, 2009: -13.8% or -1.5%/yr compounded

Above numbers are with dividend reinvested, but inflation not yet accounted for.

Will the next 10 years be like the last 10 years? Or the 10 years before that?

Or perhaps we can look at the return over 20 years, which is 205.77%, or 5.7%/yr compounded?

Now, take away the inflation over 1999-2019, which is 54.9% cumulative, or 2.2%/yr. Now, we have 3.5%/yr after inflation.
 
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I agree with others that you really need to think in terms of what Asset Allocation you are going with. You can then check what the past 10 years have done.

But none of us can really 'expect' anything for the next ten years, unless you are in high quality10 year bonds. Even then, inflation is a question.

I'm guessing this "likeable guy" is charging you 1%? Do you like him enough to give him 1/3rd as much as you make from your money? Before taxes?

To put that in $ rather than %, for every $100,000 you have with him, if you can pull $3,000, he's pulling $1,000. I could be very likeable for an annual 1% of someone else's money! Just look at my smile :) - who couldn't "like" that!

-ERD50
 
My RoR since 2006 has been just over 7%. Since 2009 (post recession) it is 7.6%.

My NET which includes all withdrawals since 2006 is currently 4.7%.

TR Price OTOH, using a more complex time-weighted calculation says that my net since 2006 is 6.0%
 
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Been retired over 6 years & have a "If-you've-won-the-game-stop-playing (Wm Bernstein)" portfolio. Vanguard says my 10 year rate of return is 6.3%. So far that's meeting my Investment Policy Statement goal of "stay ahead of inflation and moderately grow the portfolio for legacy".
 
Mine? Better than 3% lol. Although, if he'd said 30% I would tell you to run as well.

I have been 100% equities via various index/ETFS for almost 7 years and I am up closer to 20% on AVERAGE...

Prior to 2013 I was not tracking investments close enough as a young buck to be able to tell you but I have only invested during this historic bull run, so my timespan of 10 years is skewed to some of the wiser guys out here.

EDIT to add, I own AAPL.
 
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