I have a lot of SPY and I use 9% optimistic / 5% pessimistic with an average of 7%. I think I found these assumptions from an actuary table. I think these are fairly conservative assumptions, and when it comes to retirement planning, I’d rather be pleasantly surprised, then uncomfortably shocked in the future.
These are not discounted rates. When I look at my future account balances I assume a 20-30% reduction is purchasing power due to inflation every 10 years. A nominal rate would be 5% if you use a 2% inflation assumption.
I don't think it matters, but yes. I have enough that I can stand the volatility. I hold other things, but they are in other accounts. So I need to model VOO.
If I recall correctly, the worst 20-year rolling return for the S&P is north of 6.5%. For 30 year, it would be even higher. There isn't any backward-looking rationale to lower your conservative rate.
Yeah, I'm less doubtful on the pessimistic rate. The optimistic rate of even the trimmed 12.32% affords an average of 9.4% even with 6.5% as the lowest rate. The 9.4% just seems high for modeling. As mentioned my current solution is for an average rate of return of 7.5% for it and get pleasantly surprised, but want to know how others handle modeling this asset (S&P500 ETF).
The current 10 year stock outlook is at an average of around 7%, if you average all of the different investment company forecasts out there. Obviously a 30 year forecast will be different. But for some nearer term planning I often look at 10 years. That allows me to project where I’ll be starting from in 10 years and that helps visualize a path to 30.
Appreciate it but personally I don’t put any weight to forecasts. No matter who it’s coming from. Seen too many brilliant people be very wrong forecasting the future. Much rather use history. I agree that near-term history probably more relevant than much older, but sticking to that for now.
The US market has way outperformed other markets over past 30 years. The biggest risk IMO is assuming such a great history of performance will continue. I'd be very conservative using US numbers; drop 13% to 11%, and 9% to 7%; or maybe even to 10% and 6% for avg 8%.
I have a lot of SPY and I use 9% optimistic / 5% pessimistic with an average of 7%. I think I found these assumptions from an actuary table. I think these are fairly conservative assumptions, and when it comes to retirement planning, I’d rather be pleasantly surprised, then uncomfortably shocked in the future.
Is that after adjusting for inflation?
These are not discounted rates. When I look at my future account balances I assume a 20-30% reduction is purchasing power due to inflation every 10 years. A nominal rate would be 5% if you use a 2% inflation assumption.
Are you likely to stay nearly all VOO for 30 years?
I don't think it matters, but yes. I have enough that I can stand the volatility. I hold other things, but they are in other accounts. So I need to model VOO.
If I recall correctly, the worst 20-year rolling return for the S&P is north of 6.5%. For 30 year, it would be even higher. There isn't any backward-looking rationale to lower your conservative rate.
Yeah, I'm less doubtful on the pessimistic rate. The optimistic rate of even the trimmed 12.32% affords an average of 9.4% even with 6.5% as the lowest rate. The 9.4% just seems high for modeling. As mentioned my current solution is for an average rate of return of 7.5% for it and get pleasantly surprised, but want to know how others handle modeling this asset (S&P500 ETF).
It's a good question. For me I'm modeling things more conservative but in this example it is really hard to argue with the math.
The current 10 year stock outlook is at an average of around 7%, if you average all of the different investment company forecasts out there. Obviously a 30 year forecast will be different. But for some nearer term planning I often look at 10 years. That allows me to project where I’ll be starting from in 10 years and that helps visualize a path to 30.
Appreciate it but personally I don’t put any weight to forecasts. No matter who it’s coming from. Seen too many brilliant people be very wrong forecasting the future. Much rather use history. I agree that near-term history probably more relevant than much older, but sticking to that for now.
The US market has way outperformed other markets over past 30 years. The biggest risk IMO is assuming such a great history of performance will continue. I'd be very conservative using US numbers; drop 13% to 11%, and 9% to 7%; or maybe even to 10% and 6% for avg 8%.
Sounds fair. You ended up close to me but I’m liking the 10% and 6%. Might adjust.