4 ms·

The real answer: save $20,000 a year at 3% growth for 30 years. If you want to do it in 20 years you need 8% growth, which is probably not sustainable; or you c

by defen 9y ago

The real answer: save $20,000 a year at 3% growth for 30 years. If you want to do it in 20 years you need 8% growth, which is probably not sustainable; or you can save $35,000 per year at 3%.

everdev 9y ago
8% annual average return is not unrealistic for the US stock market. I did it using this method. I worked hard and lived within my means for 5 years. You'll quickly realize that after taxes a million isn't close to retirement money in the Bay area.
- defen 9y ago
  Cumulative return for the S&P 500 over the past 9 years (conveniently leaving out the 2008 crash), with dividend reinvestment, is equivalent to a YoY gain of 16.25%, which gets you to a million on $46,000 per year for those 9 years. However I think it would be foolish to presume that the stock market will continue to post those kind of gains forever. Edit: adjusted ambiguous wording about S&P gains
  - yakitori 9y ago
    > Cumulative return for the S&P 500 over the past 9 years (conveniently leaving out the 2008 crash), with dividend reinvestment, is equivalent to a YoY gain of 16.25% That's a bit disingenuous to use the generational market lows of 2009 as your starting point. It would be like using the all-time highs of 2000 and the 2009 lows as your range. Then the cumulative returns would be negative ( including dividends ). > However I think it would be foolish to presume that the stock market will continue to post those kind of gains forever. It's impossible for any economy/market/whatever to maintain a 16% return every year.
    - defen 9y ago
      > That's a bit disingenuous to use the generational market lows of 2009 as your starting point. It would be like using the all-time highs of 2000 and the 2009 lows as your range. Then the cumulative returns would be negative ( including dividends ). Right, I did that on purpose, just as a way of showing that luck (in terms of accidental market timing) has a huge impact on returns. As I said in top comment, even 8% is not sustainable, let alone 16.

by defen 9y ago

The real answer: save $20,000 a year at 3% growth for 30 years. If you want to do it in 20 years you need 8% growth, which is probably not sustainable; or you can save $35,000 per year at 3%.

everdev 9y ago

8% annual average return is not unrealistic for the US stock market. I did it using this method. I worked hard and lived within my means for 5 years. You'll quickly realize that after taxes a million isn't close to retirement money in the Bay area.

defen 9y ago
Cumulative return for the S&P 500 over the past 9 years (conveniently leaving out the 2008 crash), with dividend reinvestment, is equivalent to a YoY gain of 16.25%, which gets you to a million on $46,000 per year for those 9 years. However I think it would be foolish to presume that the stock market will continue to post those kind of gains forever. Edit: adjusted ambiguous wording about S&P gains
- yakitori 9y ago
  > Cumulative return for the S&P 500 over the past 9 years (conveniently leaving out the 2008 crash), with dividend reinvestment, is equivalent to a YoY gain of 16.25% That's a bit disingenuous to use the generational market lows of 2009 as your starting point. It would be like using the all-time highs of 2000 and the 2009 lows as your range. Then the cumulative returns would be negative ( including dividends ). > However I think it would be foolish to presume that the stock market will continue to post those kind of gains forever. It's impossible for any economy/market/whatever to maintain a 16% return every year.
  - defen 9y ago
    > That's a bit disingenuous to use the generational market lows of 2009 as your starting point. It would be like using the all-time highs of 2000 and the 2009 lows as your range. Then the cumulative returns would be negative ( including dividends ). Right, I did that on purpose, just as a way of showing that luck (in terms of accidental market timing) has a huge impact on returns. As I said in top comment, even 8% is not sustainable, let alone 16.