What rate of return do you expect over the long haul?

[Bikerdude]

Quote:

Originally Posted by retire@40 I use 7% in my long-term plan with 3% going to inflation and 4% real. If I can get 10% for a couple of years in the beginning, then I may be able to do with a little less than 7% long-term.

What s/he said.

[Gardnr]

The question, of course, is: The rate of return of what exactly?

- Your porfolio?
- The Dow?
- The S&P 500
- The U.S total stock market (i.e. Wilshire 5000)?
- A diversified portfolio allocated across various asset classes, including a bond portion?

Nominal or real, etc., etc.

With that said...
How, I wonder, did the great one come up with precisely 6.9%?!! :confused: I mean really, a guess at future returns is just that, and could hardly be narrowed down to the tenth of a percent. Even by the hallowed one from Omaha. Don't you think?

I think that given the growth potential of the global markets that we could likely see the same type of returns that the U.S. market has seen over the last 100 years or so. So if you weight them heavily enough then you just might get a good 10% in a globally allocated stock portfolio. That's my wild a$$ guess.

Check back in 20-40 years and we'll see if I'm right.

Am I betting on that in my personal portfolio? Naaaaahhh.

[JustCurious]

Quote:

Originally Posted by Gardnr I think that given the growth potential of the global markets that we could likely see the same type of returns that the U.S. market has seen over the last 100 years or so. So if you weight them heavily enough then you just might get a good 10% in a globally allocated stock portfolio. That's my wild a$$ guess.

I think you're right. Remember that about 40% of the revenues of the companies in the S&P 500 comes from outside the U.S. So, if you're right, then the U.S. market will do just fine as well.

The people responding to this poll are obviously a conservative bunch. According to Vanguard, the average annual return of the U.S. market from 1926 to 2007 is 10.4%, and that 80 year period included the Great Depression, two world wars, the stagflation and oil crisis of the 1970's, the S&L crisis of the 1980's, Black Monday in 1987, the stock market bubble of the late 1990's, and the tech crash and bear market that followed in 2000 - 2002. The stock market has proven itself to be resilient over and over again, and I don't see why it won't continue to produce similar returns in the future, especially given the fact that a significant portion of U.S. companies' revenues now come from overseas.

[crazy connie]

Expect nothing and you will not be disappointed.

OR

Prepare for the worst and be happy when it doesn't happen.

[cute fuzzy bunny]

So it looks like the collective opinion is somewhere between 5 and 10% but most expected around 6-8%.

Glad we cleared that up

[Notmuchlonger]

Well I voted the 1% because I wanted to be different.

[HFWR]

Quote:

Originally Posted by Notmuchlonger Well I voted the 1% because I wanted to be different.

I'm cool with you being different. I just hope you're not right...

[Notmuchlonger]

Quote:

Originally Posted by HFWR I'm cool with you being different. I just hope you're not right...

Im never right.

[Marquette]

Quote:

Originally Posted by Notmuchlonger Im never right.

Wait a minute....

[FinanceDude]

I've been saying 6-8% for ten years.........

[unclemick]

Quote:

Originally Posted by FinanceDude I've been saying 6-8% for ten years.........

Ten years is not 20 to 40 years. I'm still holding out for the Saint's in the Superbowl - even though the Pat's have good football team.

heh heh heh - hope springs eternal. Lucky I was working and investing 1966 - 1982 when I didn't know any better. I had upper and lower 8% and 10% curves drawn with my no 2 pencil on K&E graph paper when I was planning to retire at 63 in 2006. .

[kcowan]

I go along with John Bogle: 7% nominal for equities
Sadly I have been using 4% for inflation (could be too low).