471–480 of 496 posts
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It depends. I had a pension plan that grew x2 in 17 years (don't know what they invested into). My own investments grew much faster than S&P though.
Is that pension plan defined benefit or defined contribution?
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> I contributed 50% to a bond fund, as well, but that is like, 10% of the total, nowadays. That's one of the ridiculous aspects of fixed-percentage allocations: by constructions those allocations tell you that you should get rid of the things that are making you the most money, and put it into the things which are underperforming instead. (I get that you didn't do that, I'm just got reminded of it.)
I think that this holding stocks and bonds and then re-balancing every year or so is advice from back in the 1980's when historically bonds got under valued when stocks boomed and vice versa, so this made sense. I don't think that works so well now, especially when we had zero or negative interest rates for such a long time. If you can tolerate the risk (have a large amount of assets relative to your spending), inves…
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I want to agree with you, except that almost all of the salescritters for these products promote them as "beating the market." They _have_ to sell them this way because if their customers had any idea what the whole-market returns actually were, they wouldn't pay extra for the privilege of a far riskier (and lower-performing, on average) investment. And the S&P 500 returns more like 10% per year. A bit higher if you…
SP500 had not returned 10% a year historically. And really would want to look at returns above the cash rate. And the SP500 has had unusually good performance relative to other equity indexes. Would not count on that forever.
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Is it invested in an index fund?
Yes. I contributed 50% to a bond fund, as well, but that is like, 10% of the total, nowadays.
Portfolio re balancing, like ETFs is one of those things that has been shown to work over time in many studies. ETFs re balance. The stock / bond ratio was an early form of "automatic" investing.
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Your falling for the same trap as most novice investors - past performance has no predictive value of future performance. In fact, high performing equities if anything tend to fall and regress to the mean.
> In fact, high performing equities if anything tend to fall and regress to the mean. Ok, honest question. Have you ever looked at the S&P, say over 50 years? Just simple yes or no.
It’s pretty clear high performing company don’t maintain it.
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> In fact, high performing equities if anything tend to fall and regress to the mean. Ok, honest question. Have you ever looked at the S&P, say over 50 years? Just simple yes or no.
Yes, have you? It’s pretty clear high performing company don’t maintain it.
No, you haven't.
Because if you did, you woulnd't be looking at an exponential and saying "but but but it reverts!!!!"
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Those returns depend on when you invest. The inflation adjusted annualized return of the S&P 500 was negative from January 2000 to January 2013 at -0.25%. The inflation adjusted total annual return from January 2000 to January 2024 was 4.5%. https://ofdollarsanddata.com/sp500-calculator/
Sure, you can get lower returns as well by cherry-picking the start and stop dates, especially for shorter intervals. When economists say things like, "the market returns X on average," they always mean over much longer periods of time than your example.
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The citation of 7% as the true return isn't a "shortcut", though a nominal return of 10% could be argued to be, but an acknowledgement that total returns are not real without accounting for inflation. If an hypothetical index in a developing country rises by 50%, but inflation is 100%, then even though the nominal index returns may look impressive, it has actually had a negative real return, as the real inflation-adj…
What's the reason for picking January 1974 as the starting date?
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You can pull up SP100 and SP500 and look at their historical returns. SP100 is an actual index, not something I made up for illustration. If you look at the last 40ish years, SP100 is up roughly 45 times, SP500 is up roughly 50 times. What might help understand this concept intuitively is if you take it to the extreme: what if you always held only the very first company of the SP500. Sure, you would have a lot of the…
Sorry I know what you mean - I’m just having trouble finding any data source / website that shows useful comparisons going back that far - what website are you looking at? These are the 10 year returns I’m seeing according to S&P: S&P 500: 11.1% S&P 500 Top 50: 13.2% S&P 500 Top 10: 18.1% The trend is pretty clear, at least in the last decade. My other point was that the historical data may not be as relevant because…