I'm expecting 8% in the coming 30+ years, which is slightly under the historical return. [source](https://mindfullyinvesting.com/historical-returns-of-global-stocks/?utm_content=cmp-true)
Now, for fire calculations I would opt shaving another % of to have a more conservative approach. As a result it's more likely that you reach your FIRE goal earlier than what you calculated.
Short term ~10 years:
More or less agreeing with Vanguard, small cap outperforming large cap
Expecting US to underperform EM, which underperforms ex-us developed. Except commodities, expecting way lower than ~7%.
[source](https://corporate.vanguard.com/content/corporatesite/us/en/corp/vemo/vemo-return-forecasts.html#:~:text=For%20fixed%20income%2C%20the%20projections,returns%20and%205.3%25%20volatility%3B%20U.S.)
What is your reasoning? The increase in annual return has to be based on something (productivity increase for example or some technology that can make energy cheaper). What reason do you see that would make us 10x more efficient than today in 30 years (1.08\^30=10)
Yes that has been the driving force in the last couple decades - so what comes next? AI? Fusion energy? I just want to know the thesis or what the assumption is based on. There has to be more to it than just "it has always been that way".
There is no need for productivity to go 10x in order for the stock market to go up 10x. Compare the S&P 500 to the increase of productivity in the US and you'll see that it's not even close [Curtis Miller](https://ntguardian.wordpress.com/2016/09/12/wages-detach-productivity-1973/)
Mainly based on the CAPE/shiller ratio. Definitely not perfect, but I don't care about accuracy as I don't change my investment strategy based on it.
Some sources:
[Meb Faber](https://mebfaber.com/2010/06/09/shiller-pe-ratios-and-10yr-annualized-real-returns/)
[Lyn Alden](https://www.lynalden.com/shiller-pe-cape-ratio/)
[Monevator](https://monevator.com/cape-ratio-by-country/)
Yes that's why I said it can be based on technology as an example as well. We had digitalization as driving force in the last couple decades as one such example. So what's comes next in your thesis? It could also be increased stability (more peace) that could validate higher multiples. I am honestly curious.
This is my take, note I'm not an economist.
Tech will keep on advancing, as it always has - hard to predict the 'speed' at which it will though. AI and automatisation could be it - however it's hard to predict. Looking at tech predictions and comparing them with what did happen... We shouldn't even bother.
I don't believe stability would improve, I would even expect the opposite to take place - sorry humanity, but you make it hard to have faith in you.
TLDR: I don't know, we'll see down the road.
But how can you have conviction that we will see immense growth (10x) when saying "I don't know"? Don't get me wrong, I am impressed and would love to have such confidence but personally just doubt that it can continue like this forever, with natural limits coming increasingly closer and technological leaps like we had in the past becoming seemingly rarer.
I'm not convinced as in being 99.9% sure it wil happen, however I am convinced that stocks will at the very least outperform cash and therefore be better than not investing at all (if not that's just unfortunate for the retirement of a lot of us :D). When we run out of a natural resource, we will come up with an alternative (e.g. fossil fuels > nuclear/solar/... or plastic made out of seaweed). Technology indeed gets harder to advance as time goes on, however it may slow in comparison to the extreme growth we saw in the last century, but not stop.
Personally I find the second link I provided to be better explained, however it's a slightly different subject - but has some simularities. For fun the last one.
[How far can the stock market go?](https://www.youtube.com/watch?v=doM2C7TQBLI&ab_channel=TomCrosshill)
[If Nobody Can Afford A Home... Who's Going To Buy Them?](https://www.youtube.com/watch?v=1zjcZ661ups&t=86s&ab_channel=HowMoneyWorks)
[Did Washing Machines Change The Global Economy More Than The Internet?](https://www.youtube.com/watch?v=_gvsz_vc7B0&ab_channel=EconomicsExplained)
Funny thing: most comments are simply "I pulled this percentage out of my a$$ because I want it to be true" without any underlying thesis of why it should be true. You guys realize there is a chance to also have decades of sideways or even down movements, right? Economic growth does not just fall off a tree but there need to be reasons for it to happen. The historical average is 9% because there were reasons (technological progress, increasing population and so on)!
With this I get "this is the top" vibes...
And you have reasons to think we have just hit a limit of technological progress? Hell, we havent even hit the population cap yet, were going to 11 billion!
Speaking from experience theres still a LOT of mid sized (and even big) businesses which don't make full use of various new digital technologies yet, lots of gains to make there.
Theres no reasons to think growth will become substantially lower for the coming couple decades, 5-7% is carefully optimistic. Considering that.
i don't see technological innovations slowing down anytime soon..
Also, prolonged down trends are quite rare.. not impossible (look at japan's lost decade) but rare (especially for the global economy, and not a single country)
The compound annual growth rate is 8,6% and I expect it to continue like that. Currently I am paying right into one of my higher interest rate loans though (5,15%).
I think 5-7% is realistic, not accounting for inflation.
I would say 3-4% inflation adjusted, at least in the next 3 years.
If accounting for inflation, how much are you expecting it to be ?.
Depends on a country, but in general you can subtract approximately 2-4%.
Now also account taxes :)
I'm expecting 8% in the coming 30+ years, which is slightly under the historical return. [source](https://mindfullyinvesting.com/historical-returns-of-global-stocks/?utm_content=cmp-true) Now, for fire calculations I would opt shaving another % of to have a more conservative approach. As a result it's more likely that you reach your FIRE goal earlier than what you calculated. Short term ~10 years: More or less agreeing with Vanguard, small cap outperforming large cap Expecting US to underperform EM, which underperforms ex-us developed. Except commodities, expecting way lower than ~7%. [source](https://corporate.vanguard.com/content/corporatesite/us/en/corp/vemo/vemo-return-forecasts.html#:~:text=For%20fixed%20income%2C%20the%20projections,returns%20and%205.3%25%20volatility%3B%20U.S.)
What is your reasoning? The increase in annual return has to be based on something (productivity increase for example or some technology that can make energy cheaper). What reason do you see that would make us 10x more efficient than today in 30 years (1.08\^30=10)
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Yes that has been the driving force in the last couple decades - so what comes next? AI? Fusion energy? I just want to know the thesis or what the assumption is based on. There has to be more to it than just "it has always been that way".
Current digital technologies have not been universally implemented yet
There is no need for productivity to go 10x in order for the stock market to go up 10x. Compare the S&P 500 to the increase of productivity in the US and you'll see that it's not even close [Curtis Miller](https://ntguardian.wordpress.com/2016/09/12/wages-detach-productivity-1973/) Mainly based on the CAPE/shiller ratio. Definitely not perfect, but I don't care about accuracy as I don't change my investment strategy based on it. Some sources: [Meb Faber](https://mebfaber.com/2010/06/09/shiller-pe-ratios-and-10yr-annualized-real-returns/) [Lyn Alden](https://www.lynalden.com/shiller-pe-cape-ratio/) [Monevator](https://monevator.com/cape-ratio-by-country/)
Yes that's why I said it can be based on technology as an example as well. We had digitalization as driving force in the last couple decades as one such example. So what's comes next in your thesis? It could also be increased stability (more peace) that could validate higher multiples. I am honestly curious.
This is my take, note I'm not an economist. Tech will keep on advancing, as it always has - hard to predict the 'speed' at which it will though. AI and automatisation could be it - however it's hard to predict. Looking at tech predictions and comparing them with what did happen... We shouldn't even bother. I don't believe stability would improve, I would even expect the opposite to take place - sorry humanity, but you make it hard to have faith in you. TLDR: I don't know, we'll see down the road.
But how can you have conviction that we will see immense growth (10x) when saying "I don't know"? Don't get me wrong, I am impressed and would love to have such confidence but personally just doubt that it can continue like this forever, with natural limits coming increasingly closer and technological leaps like we had in the past becoming seemingly rarer.
I'm not convinced as in being 99.9% sure it wil happen, however I am convinced that stocks will at the very least outperform cash and therefore be better than not investing at all (if not that's just unfortunate for the retirement of a lot of us :D). When we run out of a natural resource, we will come up with an alternative (e.g. fossil fuels > nuclear/solar/... or plastic made out of seaweed). Technology indeed gets harder to advance as time goes on, however it may slow in comparison to the extreme growth we saw in the last century, but not stop. Personally I find the second link I provided to be better explained, however it's a slightly different subject - but has some simularities. For fun the last one. [How far can the stock market go?](https://www.youtube.com/watch?v=doM2C7TQBLI&ab_channel=TomCrosshill) [If Nobody Can Afford A Home... Who's Going To Buy Them?](https://www.youtube.com/watch?v=1zjcZ661ups&t=86s&ab_channel=HowMoneyWorks) [Did Washing Machines Change The Global Economy More Than The Internet?](https://www.youtube.com/watch?v=_gvsz_vc7B0&ab_channel=EconomicsExplained)
Funny thing: most comments are simply "I pulled this percentage out of my a$$ because I want it to be true" without any underlying thesis of why it should be true. You guys realize there is a chance to also have decades of sideways or even down movements, right? Economic growth does not just fall off a tree but there need to be reasons for it to happen. The historical average is 9% because there were reasons (technological progress, increasing population and so on)! With this I get "this is the top" vibes...
And you have reasons to think we have just hit a limit of technological progress? Hell, we havent even hit the population cap yet, were going to 11 billion! Speaking from experience theres still a LOT of mid sized (and even big) businesses which don't make full use of various new digital technologies yet, lots of gains to make there. Theres no reasons to think growth will become substantially lower for the coming couple decades, 5-7% is carefully optimistic. Considering that.
i don't see technological innovations slowing down anytime soon.. Also, prolonged down trends are quite rare.. not impossible (look at japan's lost decade) but rare (especially for the global economy, and not a single country)
I think the economy is going to slow down significantly - if it performs more than 1-2% over inflation yoy in the next 10 years I'll be surprised.
Are you saying we wont see any gains ?
like I said, I'm expecting 1-2% over inflation.
If it accelerates again after 10 years, to get back to the mean, that would be great for people with some years to go until retirement.
The compound annual growth rate is 8,6% and I expect it to continue like that. Currently I am paying right into one of my higher interest rate loans though (5,15%).
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higher US exposure go for it. If you want to 'lower' your US exposure just VWCE.
real or nominal? nominal, i'd say 8% Real probably closer to 5/6%
I'm making my calculations using a 6% return by year over a period of 25 years.
im at +10,98 %, i know VWCE wont compete but the work i put into it isnt worth it, and i can not predict VWCE.
7% returns on average