But that's only true for the sum that you happened to invest in 3/2000. If you've been DCAing into an S&P500 index fund every week for the last 22 years you've done a hell of a lot better than a 5% return.
Igy chose 3/2000 because the market crashed after that and the S&P lost about 46%. He always picks that year because it puts the market in a bad light when instead the market has been, by far, the best investment vehicle bar none. Igy will always choose that year. It could not be more misleading.
And you use 140 years of Dow returns as if vampires or the Industrials have relevance to actual living people.
How’s the Tesla $2,000 versus SARK working? 😹 Sold a bunch of SARK over $60 last week.
Igy - this is ridiculous even for you. All the charts you posted was for a date right before a precipitous decline in the market. Come on man - do better. Don't be deceitful. I am embarrassed for you to pull this stuff. The market HAS returned 11% annually for as long as it has been around. Please don't pick 2000 as a starting point. Try to be objective.
Just a cursory look at the charts makes your criticism suspect.
Why not just take the first year of each decade. No, that was too easy. Instead cherry pick the dates of the last century when the market tanked soon after.
1901
1920
1928
1931
1936
1941
1950
1968
1982
1999
2002
2007
It is laughable how cherry-picked these numbers were. Please try to be more objective.
Just a cursory look at the charts makes your criticism suspect.
Why not just take the first year of each decade. No, that was too easy. Instead cherry pick the dates of the last century when the market tanked soon after.
1901
1920
1928
1931
1936
1941
1950
1968
1982
1999
2002
2007
It is laughable how cherry-picked these numbers were. Please try to be more objective.
Look at the charts. Much better to examine performance near high to extrapolated historical performance. That is why your projections for future returns from today is a fairy tale that will turn in to a horror show for investors. Hopefully not for you or other posters here.
Why not just take the first year of each decade. No, that was too easy. Instead cherry pick the dates of the last century when the market tanked soon after.
1901
1920
1928
1931
1936
1941
1950
1968
1982
1999
2002
2007
It is laughable how cherry-picked these numbers were. Please try to be more objective.
Look at the charts. Much better to examine performance near high to extrapolated historical performance. That is why your projections for future returns from today is a fairy tale that will turn in to a horror show for investors. Hopefully not for you or other posters here.
If you put $8,000 in S&P in 1980 it would be worth $988,000 today. That is without any additional investing.
The historical return of the Dow is about 11% over the last 100 years and another 1% with dividends reinvested. Name any other investment that rivals this. Your portfolio, historically, would double every 5.5 years.
The historical return of the Dow is about 11% over the last 100 years and another 1% with dividends reinvested. Name any other investment that rivals this.
Look at the charts. Much better to examine performance near high to extrapolated historical performance. That is why your projections for future returns from today is a fairy tale that will turn in to a horror show for investors. Hopefully not for you or other posters here.
If you put $8,000 in S&P in 1980 it would be worth $988,000 today. That is without any additional investing.
The historical return of the Dow is about 11% over the last 100 years and another 1% with dividends reinvested. Name any other investment that rivals this. Your portfolio, historically, would double every 5.5 years.
In 1980 the average income in the United States for an individual was under $15,000 a year. A 30 year Treasury Bond was yielding about 15%. Most people with $8,000 to invest in the S&P 500 would be in excess of 50 years of age. That would make your hypothetical person 92 years of age, if they were still alive. On the other hand, if they had bought that 30 Year Treasury Bond, and reinvested the proceeds upon maturity in another 30 Year Treasury they would have dramatically outperformed your hypothetical. 😂
If you put $8,000 in S&P in 1980 it would be worth $988,000 today. That is without any additional investing.
The historical return of the Dow is about 11% over the last 100 years and another 1% with dividends reinvested. Name any other investment that rivals this. Your portfolio, historically, would double every 5.5 years.
In 1980 the average income in the United States for an individual was under $15,000 a year. A 30 year Treasury Bond was yielding about 15%. Most people with $8,000 to invest in the S&P 500 would be in excess of 50 years of age. That would make your hypothetical person 92 years of age, if they were still alive. On the other hand, if they had bought that 30 Year Treasury Bond, and reinvested the proceeds upon maturity in another 30 Year Treasury they would have dramatically outperformed your hypothetical. 😂
In 1980 the average income in the United States for an individual was under $15,000 a year. A 30 year Treasury Bond was yielding about 15%. Most people with $8,000 to invest in the S&P 500 would be in excess of 50 years of age. That would make your hypothetical person 92 years of age, if they were still alive. On the other hand, if they had bought that 30 Year Treasury Bond, and reinvested the proceeds upon maturity in another 30 Year Treasury they would have dramatically outperformed your hypothetical. 😂
That is a lame post. The 22 year return from the peak of the Tech Bubble 3/2000 through 3/2022 (All Everything Bubble) the annualized S&P 500 return was 4.984% and with dividends reinvested ( which is rarely done as a practical matter) 6.944%. There has never in history been a period where the return was consistently 10% a year for a retiree.
But that's only true for the sum that you happened to invest in 3/2000. If you've been DCAing into an S&P500 index fund every week for the last 22 years you've done a hell of a lot better than a 5% return.
So, exactly how many weeks of the last 22 years have you “DCAing” into an S&P 500 index fund? :-)
1) Igy was commenting about MY investments, so I told him how concerned I was, which is not at all.
2) Investment discussion can't involve those who don't invest. I can't help them.
3) What is your definition of a prolonged bear market? 3 years? 5 years? 10 years? The latter is extremely unlikely. If a person with a normal-sized retirement account ($1-$3 million) wants to protect themselves against a lengthy bear market, they should do all these things: don't retire until you are debt free and own your house free and clear, have 3 YEARS of expenses saved in cash or other liquid way. That's pretty much it. If the market tanks a ton, you can use your 3 years of expenses to help pay for things while you wait for the market to recover. IF during that time you also have Social Security, then your 3 years of expenses will last even longer, maybe up to 5 years. If you get to the end of 5 years and the market hasn't recovered, well, at a minimum you have 5 fewer years you need to withdraw from your retirement pile. That's good enough for most people. If you have less than $1 million or even nothing or next to nothing, then you should plan to work until you are debt free and maybe until you are 70 and not start taking SS until then.
Is 1-3 million even enough to retire nowadays? You can't even buy a house for 1 million in many desirable areas now. My house is worth over 1 million and it's over 40 years old! Our net worth is around 1.3-1.4 million (not for long if the market tanks) but I feel like we won't be able to retire for another 20+ years.
Depends on how old you are, where you want to retire, what your retirement plans are.
If I only had $1 million today and wanted to retire, remember first that I say you MUST have these things in order first:
1) NO debt including a paid-for house that you live in...OR, I suppose I would accept if you have renters in there that then paid for you to rent another place...the house needs to be paid for though.
2) Emergency fund of at least 3 months of expenses, but in my case, I have 3 YEARS.
Then, what I would do is this:
1) Move somewhere where I can subsist on $40,000 per year (which is 4% draw on a million dollars). IF I can do that in the house I own, then perhaps I stay there. If I need to move, then I sell the house and buy one outright with the proceeds of the sale. This can be done in a lot of decent places in this country for a couple who owns their own house and has zero debt. You won't be living a grand lifestyle, but it can be done. If you then also have Social Security, you might double your income to $80,000 depending on what you made while working and how old you were when you took it.
2) If you have $2 million, that's $80,000 a year draw without considering SS. That's very solid and doable for a ton of people. You can even have some fun on that, ESPECIALLY if you add in SS on top of that.
3) $3 million? That's $120,000 annually not including SS. If you can't live worry free on that with ZERO debt, then you have a big problem.
Also, any good fortune I have is because I made it happen. I invested early and often and unbroken since 1989.
okay, apparently i took your comment out of context, and that in part explains my consternation,.
But good for you.
There's a boatload of people out there that didn't have your opportunities and breaks and good fortune, and they are not going to be so indifferent to seeing what little they have in the way of retirement savings get shredded.
I try to keep that in mind.
I understand always that people have greater misfortune in their lives (illness, death in the family, prolonged job loss) than I do. I am not though without misfortune in my life, but I have overcome those misfortunes, and my family members that had misfortunes have overcome those as well.
I definitely didn't have any opportunity given to me, and I didn't get any breaks along the way either. I've been between jobs. I took some really part-time jobs and jobs that I was way over qualified for when I went back to graduate school. Even after I finally had what I considered to be a career job, I worked my butt off teaching computer classes in the evening and on weekends for a couple of years so that I could invest to the level I wanted to.
I had many times in my life when I wanted to pare back my investing, but my wife and I would talk about it, and we always came to the same conclusion...keep investing...we can buy that shiny thing next year.
Yes, bad things happen to people, but for most people, they don't have enough invested because they didn't invest enough, or they waited and waited and waited to get into the market looking for the "right time", or they rationalized that they didn't need money when they were old, and all the other kinds of things people do to talk themselves out of doing the right thing.
I made it happen.
I worked hard in high school so I could go to college. I had many jobs as a youth, and I saved up so I could pay for a decent percentage of my college education so that I would not have a big loan to pay back (I had to pay $7,500 back for loans I took out).
I worked hard in college so that I would have a decent resume that could enable me to get a job when I graduated.
I worked hard in the jobs I got so that when layoffs came, I was not on the list. I learned enough about my current field in a job I had so that I could strike out on my own. I did that for the purpose of working FEWER hours per week, but not only did I do that, but I also made more money too.
Some people are in a good spot in life because they worked hard to make it happen. I did that.
Your analogy indicates you know essentially nothing about investing, markets, anything. The S&P 500 returns 10% per year on average, meaning you win every year (on average). The odds of winning on red at the roulette wheel are less than 50%, so you lose every play (on average). Equating the too is ignorant and incorrect at best.
Anyone who plans on living another 10+ years can feel totally fine about having a lot of their money in a broad market index fund. If you're really worried about short term fluctuations you can park your money in an I bond (currently yielding around 7%). If you're putting your money in savings or CDs, you are simply financially stupid/ignorant. It's really that simple.
That is a lame post. The 22 year return from the peak of the Tech Bubble 3/2000 through 3/2022 (All Everything Bubble) the annualized S&P 500 return was 4.984% and with dividends reinvested ( which is rarely done as a practical matter) 6.944%. There has never in history been a period where the return was consistently 10% a year for a retiree.
Cherry pick the roughly the very worst date a person could have invested in the last 40 years and then use it argue against a demonstrable fact that the average rate of return for the S&P 500 is ~10%/year. Anyone can fact check that by spending a couple minutes on google and can calculate it themselves by spending a couple more minutes with excel. Why post such things? And why would you say reinvesting dividends is rare? Everyone I know does that. That's kind of the whole point to compound growth.
Haha, I love it. OK, think what you will. You're obviously smarter, more experienced, better educated and more knowledgeable than me. I recognize your internet superiority and bow before your enhanced intellect and insights. :-D
I've got skin in the game and this scenario (being close to retirement) is very real to me. I've looked at various combinations and permutations of end of career scenarios very carefully. You are welcome to consider me an idiot; in fact that is my old (now retired) fake name.
My average rate of return over the last 5 years is around 18%. If I keep doing what I've been doing an only average 10%/year, I will still be able to retire at age 37. I don't plan on retiring then, but I could. I expect to be making over $300k/year between my job income and investments by age 40. Will probably start valuing my time more then.
None of that is relevant though. The point is that equating a winning game to a losing game is wrong. Anyone who views investing in index funds as remotely comparable to roulette knows nothing about investing. Sorry.
But that's only true for the sum that you happened to invest in 3/2000. If you've been DCAing into an S&P500 index fund every week for the last 22 years you've done a hell of a lot better than a 5% return.
So, exactly how many weeks of the last 22 years have you “DCAing” into an S&P 500 index fund? :-)
Almost all of them. It's why I was able to retire early 2 years ago.
(1) My average rate of return over the last 5 years is around 18%. If I keep doing what I've been doing an only average 10%/year, I will still be able to retire at age 37. I don't plan on retiring then, but I could. I expect to be making over $300k/year between my job income and investments by age 40. Will probably start valuing my time more then.
(2) None of that is relevant though. The point is that equating a winning game to a losing game is wrong. Anyone who views investing in index funds as remotely comparable to roulette knows nothing about investing. Sorry.
(1) Bravo! You win the imaginary internet competition! Against somebody, surely...
(2) You've completely missed my point, which I admittedly overemphasized with the roulette analogy.
That is a lame post. The 22 year return from the peak of the Tech Bubble 3/2000 through 3/2022 (All Everything Bubble) the annualized S&P 500 return was 4.984% and with dividends reinvested ( which is rarely done as a practical matter) 6.944%. There has never in history been a period where the return was consistently 10% a year for a retiree.
Cherry pick the roughly the very worst date a person could have invested in the last 40 years and then use it argue against a demonstrable fact that the average rate of return for the S&P 500 is ~10%/year. Anyone can fact check that by spending a couple minutes on google and can calculate it themselves by spending a couple more minutes with excel. Why post such things? And why would you say reinvesting dividends is rare? Everyone I know does that. That's kind of the whole point to compound growth.
Igy is a permabear who will always emphasize the worst case scenario. He is a miserable person and is annoyed that you are not feeling likewise. His goal is to bring you down to his level. Misery loves company.
My point was about taking proper account for risk. I've just run a very simple monte carlo analysis to explore some of the possible outcomes. If we imagine a hypothetical investor, verging on retirement with $1000000 to her name, expecting to live another 40 years. Is it a good decision to put it all into a hypothetical index fund that exactly matches SP500? I've used index values from 1950 to 2022 to generate statistics for daily and yearly change. For 17912 trading days, the overall average (mean) yearly change is 9.25% (median 10.31%, standard deviation 15.92%, maximum +68.55%, minimum -47.61%). Assuming a starting stake of $1M, and annual withdrawals of $40k at the anniversary date (allowing a full year's gains / loss to be locked in), and using 200 trials with random annual changes over 40 years in each trial, the average value of the estate on passing is $17.8M. Sounds awesome, right? However, 24 of 200 trials (12%) have the estate piddled away before that point, with 1% chance of all being lost at year 21 (four years earlier than the guaranteed if you sat on cash alone). 1% chance of it all being gone after 20 years isn't very high, but I wouldn't take that chance, myself. Other interesting (if only to me) outcomes of the (very simple) analysis: - roughly 1/3 of simulations drop below $1M for as long as 5 years - 10% of all simulations drop below $1M and stay there the whole 40 years - of course, the majority of simulations go above $1M and stay there until she is in the ground, after - if, instead of drawing down $40K per year, you try to "match the market" and take out $100k per year, there is roughly 50% chance of being broke after 20 years, and only 32% chance of being able to pay for the funeral. The average value of the estate at death is a loan of $2.2M This simple analysis assumes that each year is a random event, independent of prior years, which is probably mostly true. However, we have long runs of positive and negative change. If you retire at the start of a long bear market, my simulation results are grossly overoptimistic. All that said, of course one should have some stock exposure in their retirement savings if they can carry the associated risk. But to assume that everyone can or should, without an appreciation for risk tolerance and one's unique situation, is ignorant (and verging on negligent if it's a so-called financial advisor making the statement).