newt
Veteran Member
Money flies away when you're doing the drugs Prince did.
OK, that post wins this thread.
Money flies away when you're doing the drugs Prince did.
Tiltrider,
Good point, and true, we don't have to do what others do. I guess I'm not a market guy, but I could understand playing it if one could afford to loose. And, overall, over time the returns aren't bad.
Best of luck.
Returns are better than "not bad" if you are invested diversely for the long term. About 14% avg annually for the last 10 years is pretty amazing actually and something like 11% over 65 years. Do the compounding math over that time period and it's unbelievable. Anyone who is invested in the market in the last few years should have seen their investments double. More than tripled in the last 10 years and that's w/o even adding any new money. True if you get scared and sell when there's a drop you will lose. Buy and hold has done well for me over my career.
Here's a neat trick....
If a new grandson is born, gift him $1000 and invest it for him in the stock market. Without any further investment after year 1, he will be a millionaire at 65 if the market continues to perform as it has in the past.
Might as well put it in a Roth for the grandchild to avoid taxes. Or 529 for college. And don’t forget - these are nominal not real returns so a “million” won’t be like a million today.
Here's a neat trick....
If a new grandson is born, gift him $1000 and invest it for him in the stock market. Without any further investment after year 1, he will be a millionaire at 65 if the market continues to perform as it has in the past.
If a new grandson is born, gift him $1000 and invest it for him in the stock market. Without any further investment after year 1, he will be a millionaire at 65 if the market continues to perform as it has in the past.
The old saying is "It`s time in the market, not timing the market, which works. True-ish, but if you buy dud( bad) shares, nothing works.
I've never had good luck picking stocks. I've never had bad luck investing in mutual funds and stock indexes. It's easy to pick apart anyone's particular investment if you want to. I'm happy that the value of my retirement fund tripled in the last few years with relatively consevative investments, including paying cash for my current boat.
"my retirement fund tripled in the last few years with relatively consevative investments"
I am curious which conservative fund(s) have tripled in the last few years?
I've never had good luck picking stocks. I've never had bad luck investing in mutual funds and stock indexes. It's easy to pick apart anyone's particular investment if you want to. I'm happy that the value of my retirement fund tripled in the last few years with relatively consevative investments, including paying cash for my current boat.
In simply an S&P 500 index you should have doubled your money in just the last 3 years. Go back a few more years and do the compounding math and you'll see it's not that difficult. I invest mostly in mutual fund managed by Janus Henderson. Some have returned very good rates over long periods of time. I guess some of the funds I really shouldn't call "conservative" but it's still somewhat diversified vs. me trying to pick an individual stock.
“In simply an S&P 500 index you should have doubled your money in just the last 3 years.”
Without fees or tax's, I believe it would be about 5 to double (not triple).
“I guess some of the funds I really shouldn't call "conservative"”
I have not read any articles that consider 100% stock funds as “conservative”
Perhaps look up the relative S & P 500 levels for a couple of other time frames and see what they say – maybe the year 2000 and 2007 will have some interesting data.
Data I see for S&P annual returns are (roughly):
2019 29%
2020 16%
2021 27%
Do the math and don't forget to compound and that should return roughly 90% over that time period. I don't want argue over the fine points or minor details, I was just trying to make a point. People say the stock market is a casino and people lose everything and that may be true in some cases, but historically it's one of the best places to invest your money long term. In fact, if you are investing regularly over a long period of time, the down years are actually helpful. (dollar cost averaging approach) Someone once said "You make most of your money in a down market, you just don't know it at the time"
Yes - I believe this was the point.
"I'm happy that the value of my retirement fund tripled in the last few years with relatively conservative investments"
By few I did not mean 3, I meant a handful, maybe 5 or so. Maybe we need to revert back to the nautical terms thread and discuss few, several, handful, bunch, many, etc. Sorry, not trying to be difficult but I was speaking in generalities, maybe you want hard figures with many decimal places like some do. But if you buy the fact that money in the market could have roughly doubled in the last 3 years, it's not hard to imagine that you don't need to go back too many years to see a tripling effect. That has been my experience but it of course depends on what returns you are earning. YMMV.
"it's not hard to imagine that you don't need to go back too many years to see a tripling effect."
What is the return of the S&P 500 (with no fees) from August 2007 to now and adjusted for inflation?
Nominal return 3.18x
What is the return of the S&P 500 (with no fees) from June 2000 to now adjusted for inflation?
Nominal return 3.23x
Do we need to work on defining the meaning of doubling or tripling?
Just as one individual data point around the subject of this thread:
I never looked at this while I owned the boat, but in some year-end exercises today I ran across the deposit from the Klee Wyck transaction and thought it might be interesting to do the math. The subject comes up here from time to time.
For general landmarks, I owned the boat for ten years and paid around a quarter million when I bought it.
I looked at capital cost which I considered to be purchase cost minus proceeds of sale+ large maintenance and improvement spending+ the time value of money at 4%.
That cost over the ten years was $371k or an average of 37k/year
Non- fuel operating costs consisted of moorage, insurance, license, tax, and registrations. That total was around 160k or 16k/year.
Fuel and fluids/routine maintenance (bottoms, fluid changes, batts, etc) total around 84K so about 8.5k per year.
These are rough numbers, but the all-in cost of owning KLEE WYCK for ten years then was around 600k total, 60K per year, or 5K per month.
I will grant you that we were not careful, and we moored in a high rent district, but I always cringe when I see this 10% of purchase price as annual ownership cost over the life of your ownership. I think more like 20% could be more realistic.
For a frame of reference, the difference between purchase price and sales price was only 13% of total ownership cost and fuel was only 3.4% of total cost.
It was worth it....
"I would caution anybody reading this to take chances when you are younger. Realize the gains from aggressive investing over time. Do not get too greedy. When you have enough, look at your life calendar, and make sure you do not fail like Stan my manager."
You are absolutely right and the market will absolutely correct sooner or later. You are also correct that it is dangerous to be 100% in stocks in retirement if you need that money for living expenses. Withdrawals in a down market are devastating and cannot likely be made up. So that's where your retirement investment strategy should differ from when you were much younger. However, the old ways of thinking are changing because you could be in retirement for 20, 30, 40 years. That is considered a long term investment. So more modern investment advice is to still invest while in retirement, but keep some money in a very safe investment to weather the downturns. You withdraw money from there when the market is down, and withdraw from your stock funds during good times as you money contiues to grow.
Given you deliberately picked dates where there would be the largest subsequent decline, even these show what would be the worst case returns for an investor over that time period. (For example, Reentering the market June 2009 would have a 5.11x nominal return. )
However, this was an investment time period unlikely to be replicated for a long time, or at least I wouldn’t count on it.
Fees on s&p index funds are something like 5bp - in other words, functionally free. Though tracking error is the real drag.
As for inflation, care to define that? I find it troubling that people use CPI etc as relevant to them. The basket of hood varies for each person.
And to be pragmatic, whatever inflation we have is constant no matter what we invest in so the absolute return is what matters, deciding between investments. With (increasing) inflation you want to be in stocks versus straight bonds.
I generally use this for inflation...
https://www.usinflationcalculator.com/
You picked the S&P 500 earlier, the same as you picked tripling in a few years. Later you said it not too hard to imagine going back too many years to see a tripling to today.
The answer(s) to that question are what you found above - about 21, 14 and 8 years or so.