|
What Is A Reasonable Return?
10-22-2005, 11:38 AM
|
#1
|
|
What Is A Reasonable Return?
Buried within this article is the fact that the Massachusetts state pension fund returned 14.5% on investment last year, and 12% over the past ten years.* The returns I see mentioned here seem to be much, much lower.*
Is this just a fluke?* If not, what explains the difference.* Is it merely a lower toleration of risk for the folks--often retirees or almost retirees--that frequent this board?* If Massachusetts opens its pension fund to state residents for investment (a current proposal), what is the downside?
|
|
|
|
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!
Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!
You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!
|
Re: What Is A Reasonable Return?
10-22-2005, 07:18 PM
|
#2
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Mar 2003
Posts: 18,085
|
Re: What Is A Reasonable Return?
Past performance does not guarantee future returns.
Aside from that caveat, I also think that you have a financially conservative group here. The retirees typically only need a couple of points over inflation over time to make it, so they are more focussed on capital preservation than on return. The accumulators (like me) usually shoot for bigger returns (and higher volatility), but most of us don't assume that we will get outsized returns when we do our planning. I know that I could reitre in as little as 5 years, but if I only manage 3 or 4 points over CPI for the next 12 to 15 years I will still be able to retire in my mid to late 40s.
__________________
"All animals are equal, but some animals are more equal than others."
- George Orwell
Ezekiel 23:20
|
|
|
Re: What Is A Reasonable Return?
10-22-2005, 11:27 PM
|
#3
|
Full time employment: Posting here.
Join Date: Aug 2004
Posts: 911
|
Re: What Is A Reasonable Return?
Quote:
Originally Posted by tozz
Buried within this article is the fact that the Massachusetts state pension fund returned 14.5% on investment last year, and 12% over the past ten years.*
|
I think I did better than that last year, although as brewer the robber baron said.... I don't plan on doing as well as I did. It's nice when it happens though Plan for a reasonable scenario, and a reasonable RR (a real RR of 2% is what I use), and be happy if/when you do better than planned. I can't wait until next Jan when I get to see how my state plan did.... I chose the 'self managed' plan, and make a game out of trying to beat the State..... I think I'll win again this year.
|
|
|
Re: What Is A Reasonable Return?
10-22-2005, 11:40 PM
|
#4
|
Thinks s/he gets paid by the post
Join Date: Dec 2003
Posts: 4,459
|
Re: What Is A Reasonable Return?
Here's an article that gives an idea of their asset allocation:
article
[In 2003] the board voted to slash its domestic stocks holdings from 42 percent to 26 percent of the portfolio, increase alternative investments, such as venture funds, to 10 percent, boost high-yield bonds to 6 percent, and introduce hedge funds, which would account for 5 percent. All of this would happen over about a three-year period.
|
|
|
Re: What Is A Reasonable Return?
10-23-2005, 12:08 AM
|
#5
|
Full time employment: Posting here.
Join Date: Aug 2004
Posts: 911
|
Re: What Is A Reasonable Return?
And lower down-
Quote:
Right now, the state pension fund is only 62 percent funded, having taken a beating in the stock market. To generate sufficient return on investment to pay the retirement benefits of state workers, the fund needs to grow with a long-term plan, Mavromates said.
|
I think their allocation plan sucks quite honestly. Selling off 16% of their US equities seems a bit risky, esp since those paper losses then become actual losses (back in 2003 no less... did they miss out on 2004?)..... and then to plow that into junk, venture funds, and hedge funds..... their quest for yield could backfire big time, and they could be looking at an even larger shortfall. As a 'fund' with a very diverse risk profile (young people, and old), I think that they need to be more cautious than this.... they're playing the game as if everyone in their fund is 30.
I could be wrong on this... and that's probably why I don't do this for a living
|
|
|
|
Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
|
|
Posting Rules
|
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts
HTML code is Off
|
|
|
|
» Recent Threads
|
|
|
|
|
|
|
|
|
|
|
|
|
» Quick Links
|
|
|