5 ms·

Vanguard is index funds, so the returns are as good (or bad) as the market.

by aninhumer 10y ago

nkkollaw 10y ago
Average..? Ex., 1%-5%/yr
- davidwihl 10y ago
  It depends on the fund. I just did a report on this for one of my classes. https://github.com/wihl/stats107-project/blob/master/writeup.pdf https://github.com/wihl/stats107-project/blob/master/writeup... All the code is in the same repository as R Markdown.
  - anthonyherron 10y ago
    MOOC or are you at Harvard? Was the course worthwhile?
    - davidwihl 10y ago
      Through the Extension school, all online. I found it worthwhile.
- lifeformed 10y ago
  7% in the long term, but with big fluctuations.
  - nkkollaw 10y ago
    Thanks.
  - davidwihl 10y ago
    Which fund? According to whom? SPY / VFIAX / S&P 500 has a CAGR 4.9% from Nov 2000 to Nov 2016.
    - Huppie 10y ago
      Not too long ago the long term rolling returns for the S&P 500 where still somewhere around this number. This article [1] is from 2012, not much has changed in the last four years. "The average 30-year rolling total return for the S&P 500 starting with 1926, is 2,478% or 11.21% annualized (geometric mean). There were several 30-year periods that had annual returns between 8% and 10%." Having said so, past returns don't guarantee anything for the future. They might give you an indication though. [1]: http://allfinancialmatters.com/2012/08/29/sp-rolling-total-returns-1-5-10-20-25-and-30-years/ http://allfinancialmatters.com/2012/08/29/sp-rolling-total-r... Edit: Here's [2] a better (?) graph of the S&P 500 with the 30 year rolling returns, inflation adjusted and dividends reinvested. Source[3] [2]: http://imgur.com/Ja1xOcA http://imgur.com/Ja1xOcA [3]: http://redd.it/3fsdex http://redd.it/3fsdex
mFixman 10y ago
Wouldn't it be a better idea to invest in bonds or more stable sources of investment for the next few years until we can make sure of the impact of Brexit-Trump? I wouldn't be surprised if AAPL and other giant third sector companies fall in value right now.
- mathgeek 10y ago
  In investing terms, you're talking about a "less risky" rather than "better" idea. You'll only know if something was better after the event in question has passed. Passive investing when you have many years before retirement means you worry about long term trends rather than short term risks.
- mxschumacher 10y ago
  while coupons (e.g. the regular payout) might be stable, bonds, too, can fall in value. One interest rate hike by the FED or ECB would send bond prices tumbling.
- matwood 10y ago
  You're talking about market timing which is incredibly hard (some say impossible) to do over a long period of time. Sure, you might miss the down here (if there is one), but then you also might miss the move back up. There is a saying that time in market is much better than timing the market. If you consistently put money in, you'll naturally also buy the downs. At that point, you just need to periodically rebalance, and with age start to shift to less risky investments.
- twic 10y ago
  Ah, you see, because the market is famously perfectly efficient, equity and bond markets have already priced in the expected effect of Brexit-Trump. So investing in equities now essentially gets you a discount over what they would have cost had Brexit-Trump not happened. Whereas (more seriously) investing in "more stable" things like bonds forces you to pay a premium, because every man and his dog has desperately been chasing stability, safety, yield, etc since 2008, in many cases using quantitatively eased money to do so.
- gragas 10y ago

Vanguard is index funds, so the returns are as good (or bad) as the market.

nkkollaw 10y ago

Average..? Ex., 1%-5%/yr

davidwihl 10y ago
It depends on the fund. I just did a report on this for one of my classes. https://github.com/wihl/stats107-project/blob/master/writeup.pdf https://github.com/wihl/stats107-project/blob/master/writeup... All the code is in the same repository as R Markdown.
- anthonyherron 10y ago
  MOOC or are you at Harvard? Was the course worthwhile?
  - davidwihl 10y ago
    Through the Extension school, all online. I found it worthwhile.
lifeformed 10y ago
7% in the long term, but with big fluctuations.
- nkkollaw 10y ago
  Thanks.
- davidwihl 10y ago
  Which fund? According to whom? SPY / VFIAX / S&P 500 has a CAGR 4.9% from Nov 2000 to Nov 2016.
  - Huppie 10y ago
    Not too long ago the long term rolling returns for the S&P 500 where still somewhere around this number. This article [1] is from 2012, not much has changed in the last four years. "The average 30-year rolling total return for the S&P 500 starting with 1926, is 2,478% or 11.21% annualized (geometric mean). There were several 30-year periods that had annual returns between 8% and 10%." Having said so, past returns don't guarantee anything for the future. They might give you an indication though. [1]: http://allfinancialmatters.com/2012/08/29/sp-rolling-total-returns-1-5-10-20-25-and-30-years/ http://allfinancialmatters.com/2012/08/29/sp-rolling-total-r... Edit: Here's [2] a better (?) graph of the S&P 500 with the 30 year rolling returns, inflation adjusted and dividends reinvested. Source[3] [2]: http://imgur.com/Ja1xOcA http://imgur.com/Ja1xOcA [3]: http://redd.it/3fsdex http://redd.it/3fsdex

mFixman 10y ago

Wouldn't it be a better idea to invest in bonds or more stable sources of investment for the next few years until we can make sure of the impact of Brexit-Trump? I wouldn't be surprised if AAPL and other giant third sector companies fall in value right now.

mathgeek 10y ago
In investing terms, you're talking about a "less risky" rather than "better" idea. You'll only know if something was better after the event in question has passed. Passive investing when you have many years before retirement means you worry about long term trends rather than short term risks.
mxschumacher 10y ago
while coupons (e.g. the regular payout) might be stable, bonds, too, can fall in value. One interest rate hike by the FED or ECB would send bond prices tumbling.
matwood 10y ago
You're talking about market timing which is incredibly hard (some say impossible) to do over a long period of time. Sure, you might miss the down here (if there is one), but then you also might miss the move back up. There is a saying that time in market is much better than timing the market. If you consistently put money in, you'll naturally also buy the downs. At that point, you just need to periodically rebalance, and with age start to shift to less risky investments.
twic 10y ago
Ah, you see, because the market is famously perfectly efficient, equity and bond markets have already priced in the expected effect of Brexit-Trump. So investing in equities now essentially gets you a discount over what they would have cost had Brexit-Trump not happened. Whereas (more seriously) investing in "more stable" things like bonds forces you to pay a premium, because every man and his dog has desperately been chasing stability, safety, yield, etc since 2008, in many cases using quantitatively eased money to do so.
gragas 10y ago