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11-19-2015, 02:59 PM
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#21
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Full time employment: Posting here.
Join Date: May 2013
Posts: 725
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On the one spreadsheet I use (and i-orp), I use 1.5% real. As has been mentioned, the spreadsheet is probably worthless, but it was a good starting point at the time to know if I was even in the ballpark. I didn't know about FireCalc, ******** and others at the time.
To show you how inaccurate predictions can be: on a sheet I did in Quicken in 1993 (they only had a simple calculator then), I assumed 7% real. How things have changed...
__________________
“If you don't do it this year, you will be one year older when you do.” - Warren Miller
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11-19-2015, 03:21 PM
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#22
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Moderator Emeritus
Join Date: Jan 2007
Location: New Orleans
Posts: 47,474
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Quote:
Originally Posted by W2R
Before I retired, I used to do projections with various investment rates of return. Often I used 5% and assumed 3% inflation, but also tried various other rates.
But now that I am in my 7th year of retirement, I don't do any of that any more. My financial situation has turned out to be just fine with the market thriving as it has. Plus now I have SS and basically everything is coming up roses.
Now, if hyperinflation should occur I might be back to doing projections. But, so far so good.
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Quote:
Originally Posted by Golden sunsets
Was your 5% including inflation or nominal?
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5% nominal, 2% real
Quote:
Originally Posted by youbet
I wonder what you mean by hyperinflation as opposed to plain old high inflation?
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Above I wrote, "Now, if hyperinflation should occur I might be back to doing projections." I probably should have added, "Now, if plain old high inflation should occur I might be back to doing projections." But what is "plain old high inflation", and what is not? Maybe the question really is, "W2R, where do you draw the line? By what criterion will you decide to do further projections?"
Now that I am retired, I have little motivation to run further projections unless/until I feel that conditions are such that my retirement could possibly be in jeopardy unless I ramp up the LBYM markedly. For example, if inflation (~~>> spending) rises significantly faster than yield (~~>> income), I might decide to drop everything and start diving into the numbers again.
At the moment, given this year's CPI, and yield that is providing me with more than adequate income, I do not feel especially impelled to work on this problem although it is an interesting one.
In the future? Who knows. Maybe I'll just take it as it comes.
__________________
Already we are boldly launched upon the deep; but soon we shall be lost in its unshored, harbourless immensities. - - H. Melville, 1851.
Happily retired since 2009, at age 61. Best years of my life by far!
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11-19-2015, 04:27 PM
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#23
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Full time employment: Posting here.
Join Date: Apr 2011
Location: Castro Valley
Posts: 788
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I've projected the next 4 years using 2%, 3% and 4% Rates of return. Just trying to guess what I might have when I start SS.
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11-19-2015, 06:29 PM
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#24
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Recycles dryer sheets
Join Date: Jul 2013
Posts: 123
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I use 2% real for stocks and 0.5% for bonds for any point in the future.
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11-19-2015, 06:56 PM
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#25
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Thinks s/he gets paid by the post
Join Date: Oct 2006
Posts: 4,629
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1% real return.
Maybe 3% inflation and 4% nominal return.
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11-19-2015, 07:40 PM
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#26
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Thinks s/he gets paid by the post
Join Date: Dec 2004
Location: Minneapolis
Posts: 4,455
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I used 6% nominal in the past, thinking about changing it to 4% nominal.
__________________
May we live in peace and harmony and be free from all human sufferings.
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11-19-2015, 08:08 PM
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#27
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 38,010
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Gave up using rates of return and projections.
We've been retired for 16 years now. If our net worth keeps up with inflation, I'm quite happy.
__________________
Retired since summer 1999.
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11-19-2015, 08:44 PM
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#28
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Feb 2013
Posts: 9,358
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We mainly use the Fidelity RIP with the most conservative setting and have a spreadsheet with real returns and inflation as parameters. We usually model with a 0 - 1% real return in the spreadsheet.
__________________
Even clouds seem bright and breezy, 'Cause the livin' is free and easy, See the rat race in a new way, Like you're wakin' up to a new day (Dr. Tarr and Professor Fether lyrics, Alan Parsons Project, based on an EA Poe story)
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11-19-2015, 09:22 PM
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#29
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Recycles dryer sheets
Join Date: Jul 2013
Posts: 123
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I think people who assume 20th century (8% real) returns for stocks are going to be sorely disappointed.
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11-19-2015, 10:12 PM
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#30
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Thinks s/he gets paid by the post
Join Date: Mar 2014
Location: Southern Cal
Posts: 4,032
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I use 2%.
Sent from my iPad using Early Retirement Forum
__________________
Just another day in paradise
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11-19-2015, 10:48 PM
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#31
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Full time employment: Posting here.
Join Date: Apr 2015
Posts: 903
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Quote:
Originally Posted by zesty
I think people who assume 20th century (8% real) returns for stocks are going to be sorely disappointed.
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Either that or we (with our 0-4% real) will be pleasantly surprised. Oh well, we'll see. Better safe than sorry.
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11-22-2015, 04:47 AM
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#32
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gone traveling
Join Date: Oct 2007
Posts: 1,135
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Quote:
Originally Posted by 523HRR
1% real return (4% nominal, 3% inflation)
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Same. 1 percent real return before taxes regardless of AA mix. It's a simple rule of thumb , but thats what I use.
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11-22-2015, 05:35 AM
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#33
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Recycles dryer sheets
Join Date: Apr 2013
Location: Humble
Posts: 188
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4% total return for a 50/50 allocation.
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11-22-2015, 06:15 AM
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#34
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gone traveling
Join Date: Sep 2013
Posts: 1,248
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Quote:
Originally Posted by zesty
I think people who assume 20th century (8% real) returns for stocks are going to be sorely disappointed.
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But who did?
S&P 500 Return Calculator - Don't Quit Your Day Job...
2.3 % real returns
7.0 % real returns if Dividends are reinvested.
It is always the same. Nothing changes. So I expect something similar over entire 21st century. I have no idea what it will be over next 10 years.
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11-22-2015, 08:13 AM
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#35
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Thinks s/he gets paid by the post
Join Date: Jun 2013
Posts: 2,518
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Thanks to all who shared. I concur that the spreadsheet exercise is largely useless but I continue to revise and project. For me it's a form of entertainment. 😁
__________________
"Luck favors the prepared mind"
Pasteur
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11-22-2015, 08:55 AM
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#36
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jul 2006
Location: Pacific latitude 20/49
Posts: 7,677
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Quote:
Originally Posted by Spanky
I used 6% nominal in the past, thinking about changing it to 4% nominal.
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I use 4% and have for 13 years. It projects a positive balance forever (ignoring LTC). I used to use CPI but concluded that it does not reflect our reality.
__________________
For the fun of it...Keith
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11-22-2015, 09:21 AM
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#37
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jan 2008
Location: NC
Posts: 21,206
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Retired now but I used 0-2% real returns in my modeling, but I was looking for a conservative result - a likely worst case I could expect barring various black swans. I'd rather have an upside surprise than downside...
__________________
No one agrees with other people's opinions; they merely agree with their own opinions -- expressed by somebody else. Sydney Tremayne
Retired Jun 2011 at age 57
Target AA: 50% equity funds / 45% bonds / 5% cash
Target WR: Approx 1.5% Approx 20% SI (secure income, SS only)
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11-22-2015, 09:21 AM
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#38
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Recycles dryer sheets
Join Date: Nov 2013
Posts: 475
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Here is Rick ferri's forecast.
http://www.rickferri.com/blog/invest...cast-for-2015/ Hoping he is right but not counting on it.
With social security we are fine with .5%. But would love for it to be higher
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11-22-2015, 12:26 PM
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#39
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jul 2008
Posts: 35,712
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Quote:
Originally Posted by audreyh1
Gave up using rates of return and projections.
We've been retired for 16 years now. If our net worth keeps up with inflation, I'm quite happy.
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Net worth keeping up with inflation after spending makes you happy?
Oh man, there are people who expect more than that?
__________________
"Old age is the most unexpected of all things that happen to a man" -- Leon Trotsky (1879-1940)
"Those Who Can Make You Believe Absurdities Can Make You Commit Atrocities" - Voltaire (1694-1778)
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11-22-2015, 02:34 PM
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#40
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Recycles dryer sheets
Join Date: Jan 2015
Posts: 206
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So if you use a real return of 0, does that mean you don't really need to inflate any numbers on your spreadsheet year to year? For example, if I need $40,000 for 30 years with a real return of 0% for both inveatments & expenses, then I need $1,200,000 (30 x $40,000)? Am I looking at this correctly?
Racing for the FIRE finish line, but I don't know where it is.
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