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#6496 | |
MVP
Join Date: Aug 2000
Location: Lee's Summit
Casino cash: $4821637
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Quote:
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Posts: 8,287
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#6497 |
Fish are scared of me
Join Date: Nov 2001
Casino cash: $430477
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Posts: 40,721
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#6498 |
Veteran
Join Date: Dec 2019
Location: Ohio
Casino cash: $620400
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I would be curious to know what rate of return do you use for you post retirement investment portfolio projection?
It’s the time of the year that I meet with some investment professionals and consider my retirement plans, investments, estate planning, etc. I’ve noticed that many bigger firms (UBS, Merrill, etc) are being very pessimistic in their return projections for even growth balanced portfolios post retirement. Most have assumed overall rates of return below 3% after inflation adjustments. In my personal projections I am much more optimistic in my assumptions of around 6-7% after inflation. What do you think: am I overly optimistic or are the financial planners overly pessimistic? Something in between? Something else entirely? I’d love to hear your perspective. |
Posts: 1,799
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#6499 |
Supporter
Join Date: Apr 2007
Location: Scott City KS
Casino cash: $1014734
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I think 3% after inflation is a pretty historic number.
May not be applicable these days because I’m sure that number was negative with the huge inflation in the 70s. Plus most of these outfits have traditionally moved to bonds which right now are returning ass. So it might be closer than you think over a lifetime following traditional rules. I’d tend to be more conservative for retirement. Fools don’t need to be running out. |
Posts: 57,558
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#6500 | |
Mod Team
Join Date: Sep 2011
Location: Valley of the hot as ****
Casino cash: $621900
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People have been saying since 2012 that the market was going to make a correction. People have been saying since 2016 that the market was going to make a huge correction. Had you been conservative all these years, you'd have missed some HUGE gains. Asset allocation is real though. Bonds currently carry little weight so it depends how you have your money divided. If you have decades to retirement, you should be mostly in equities (index/mutual funds for most). |
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Posts: 46,019
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#6501 | |
Fish are scared of me
Join Date: Nov 2001
Casino cash: $430477
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Quote:
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Posts: 40,721
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#6502 | |
Supporter
Join Date: Apr 2007
Location: Scott City KS
Casino cash: $1014734
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Quote:
If he's getting 3% he needs to knife a fool. |
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Posts: 57,558
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#6503 | |
Veteran
Join Date: Dec 2019
Location: Ohio
Casino cash: $620400
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I agree with being conservative as well. I am about 10 years from retirement and I am fortunate that I will not need to touch any of these funds for at least another 10 years after that (effectively giving me about 20 years for more growth). |
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Posts: 1,799
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#6504 | |
Veteran
Join Date: Dec 2019
Location: Ohio
Casino cash: $620400
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I am definitely equity heavy right now. I struggle with bonds with our historically low rates knowing that they face value will drop when rates eventually rise. I need to rebalance soon but I am struggling with the idea of more bonds. I probably need to just do it. |
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Posts: 1,799
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#6505 | |
Veteran
Join Date: Dec 2019
Location: Ohio
Casino cash: $620400
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Quote:
I may have to revisit the knifing option if I were to did they were Broncos fans. I am definitely thinking more and more that I should just part ways with them. |
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Posts: 1,799
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#6506 | |
Supporter
Join Date: Apr 2007
Location: Scott City KS
Casino cash: $1014734
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Quote:
If you are, definitely knife that fool. |
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Posts: 57,558
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#6507 | |
Champs!
Join Date: Mar 2004
Location: Kansas City
Casino cash: $5288476
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Quote:
That's piss poor, IMHO.
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Posts: 53,373
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#6508 |
Veteran
Join Date: Dec 2019
Location: Ohio
Casino cash: $620400
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Fortunately no - I have been doing much better than that on my own. I have been closer to 10 percent overall average or 7-8 after inflation over many years. However, as I consider moving to a professional money manager, they all seem to think those types of returns are not sustainable over a long period of time (although that has been my experience for the past 25 years).
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Posts: 1,799
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#6509 | |
Seeking the Truth daily
Join Date: Jan 2006
Location: In the Country in MO
Casino cash: $984309
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Quote:
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“Make no mistake. If you try anything to raise the cost of vishessavatubs, I will veto it.” - Joe Biden, SOTU 2023 |
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#6510 | ||
NFL's #1 Ermines Fan
Join Date: Jul 2001
Location: My house
Casino cash: $2018491
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I want to plan for surviving trouble, so I'm assuming (pre-inflation) a 7 percent return prior to retirement, and then after retirement a 5.5 percent return on IRA funds (which I'll tap last and thus have a longer time horizon) and a 3.5 percent return on other savings that will be tapped first. I recognize that this is very conservative, but I don't want to be 80 years old and hit a bump like we had last April where I lose 30 to 35 percent of my savings and get really stressed out. However, I also agree with Peter about grimacing over bond returns. It really rankles me to accept a lower return over a long period of time just to avoid a shock risk. I wonder if my risk tolerance would keep me from doing it, but I also know that I should go with lower returns in exchange for lower risk. One thing that I keep telling myself is that even if I retire at 65 I'll still have a 20 year time horizon or longer (I hope). So it points against being too conservative. I'll likely do some sort of risk ladder where the money that I'll need in 20 years will remain more aggressive.
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