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Real return going forward
04-08-2006, 11:05 PM
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#1
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Recycles dryer sheets
Join Date: Oct 2004
Posts: 260
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Real return going forward
Most of know what the equity and bond markets have averaged over the last 100 years. We also know about the highs and lows of inflation in the past* FireCalc is a great tool using data from the past to guide us.
Fairly recently we have seen real estate go sky high and gold taking off beyond what most ever expected. Stocks crashed, many stocks have come back.
Knowing what we know and including other external factors some discussed here such as the Federal deficeit, the war in Iraq, unfriendly CEO's, political differences, medical costs gone wild, interest rates on the rise, etc etc etc.
What real return do you expect with you allocation? What % above inflation do you expect to gain with all your assets, or what % below inflation do you expect. (lets say over the next 20 years).
Gotta use your own estimate of inflation.
I wonder if it will be what it was.
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Re: Real return going forward
04-09-2006, 05:01 AM
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#2
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jul 2005
Posts: 6,189
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Re: Real return going forward
im shooting for the 4% above inflation with my 55/45 mix of stocks,bonds and commodities...since im running higher than that for the last few years i expect a drop back to the averages ,at least for me
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Re: Real return going forward
04-09-2006, 06:34 AM
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#3
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Recycles dryer sheets
Join Date: Apr 2005
Posts: 184
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Re: Real return going forward
I'm shooting for same - 4% above inflation - rougly 50% stocks, 20% bonds, 20% RE/reit, , 10% commodities/cash* *Of the stocks, around 1/2 of that allocation is international.
Who knows what the future.* *My major focus is trying to diversify against less-correlated asset classes and choices.
However you read John Maudlin's article this week - he believes "everything is interconnected" - and a US meltdown will affect everything.
http://www.frontlinethoughts.com/
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Re: Real return going forward
04-09-2006, 08:29 AM
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#4
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Thinks s/he gets paid by the post
Join Date: Apr 2006
Posts: 1,490
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Re: Real return going forward
for planning purposes, I use 4.5% real return for equities, 2% for bonds -- hopefully conservative
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Re: Real return going forward
04-09-2006, 09:32 AM
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#5
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Moderator Emeritus
Join Date: Dec 2002
Location: Oahu
Posts: 26,860
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Re: Real return going forward
Quote:
Originally Posted by GTM
I wonder if it will be what it was.
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I don't think it will.
Quote:
Originally Posted by GTM
Gotta use your own estimate of inflation.
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"Triumph of the Optimists", published in 2002, quotes 3% over the last century and 5% over the last 30 years (courtesy of 1972-1982).
Quote:
Originally Posted by GTM
What real return do you expect with you allocation? What % above inflation do you expect to gain with all your assets, or what % below inflation do you expect. (lets say over the next 20 years).
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The Gordon equation (with highly sensitive variables) and a bunch of other "wise men" are hypothecating 6-7% (before inflation). TOTO thinks the risk premium for stocks will be about 5%.
We can live with that. Especially considering that last year was a good bit higher...
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Re: Real return going forward
04-09-2006, 10:00 AM
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#6
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Mar 2005
Location: Chicago
Posts: 13,183
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Re: Real return going forward
4% pretax real return on a 50 - 50 balanced, diversified portfolio over the next 30 years. *Actual results likely to be between 0% and 8%. *If 0%, my planned 3% inflation adjusted withdrawal rate will zero my portfolio in 33.3 years, plus or minus depending on the timing of the ups and downs. *
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"I wasn't born blue blood. I was born blue-collar." John Wort Hannam
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Re: Real return going forward
04-09-2006, 12:45 PM
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#7
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Dec 2004
Location: the City of Subdued Excitement
Posts: 5,588
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Re: Real return going forward
Quote:
"everything is interconnected" - and a US meltdown will affect everything.
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It probably is and it probably will.
I am thinking in terms of 6% pretax, before inflation, and 3% inflation--but afraid that inflation will be higher.
I am diversified roughly 50/50 US/foreign stock mutual funds and, at the moment, am thinking of using Galeno's method in retirement--taking 4% out of equities every year, to go into a CD ladder. SS will be gravy.
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I have outlived most of the people I don't like and I am working on the rest.
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Re: Real return going forward
04-09-2006, 02:49 PM
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#8
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Dec 2003
Location: Losing my whump
Posts: 22,708
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Re: Real return going forward
7.22578 with a CPI factor of 3.22% and a real local inflation rate of 6.5575% for me.
__________________
Be fearful when others are greedy, and greedy when others are fearful. Just another form of "buy low, sell high" for those who have trouble with things. This rule is not universal. Do not buy a 1973 Pinto because everyone else is afraid of it.
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