5 ms·
If you think the S&P consistently returns ~9.7% per year every year, you are mistaken.
by spelunker 8y ago
If you think the S&P consistently returns ~9.7% per year every year, you are mistaken.
- User23 8y agoPretty close actually. https://www.nerdwallet.com/blog/investing/average-stock-market-return/ https://www.nerdwallet.com/blog/investing/average-stock-mark... Edit: Anyone want to clue me in on what the downvotes are for here?
- Simon_says 8y agoThe key is consistently. The S&P 500 returns are wildly variant, and the 9~ % only comes from averaging a century of growth. Whole decades might see a loss.
- TomVDB 8y agoBased on numbers here: https://seekingalpha.com/article/2789035-s-and-p-500-index-returns-by-decade-since-1940 https://seekingalpha.com/article/2789035-s-and-p-500-index-r... 1940-1950: 9.3%/y 1950-1960: 20.0%/y 1960-1970: 7.7%/y 1970-1980: 5.9%/y 1980-1990: 17.2%/y 1990-2000: 18.2%/y 2000-2010: -1.0%/y So only decade with negative growth. Add in the depression and you'll probably see a bunch more...
- fujimotos 8y agoYou need to consider inflation. In 1970, the inflation rate was 7-8%/y on average, so the "growth" these numbers imply did not exist in reality.
- spelunker 8y agoFrom that article: "While 10% might be the average, the returns in any given year are far from average. In fact, between 1926 and 2014, returns were in that “average” band of 8% to 12% only six times." So if you are investing on borrowed money with a guaranteed payout of 7% a year, that is not good for you.
- soVeryTired 8y agoThe Nikkei 225 is still down from 20 years ago. Its fate is a very plausible alternative history for the S&P.
- verbify 8y agoTaking into account reinvested dividends, it's given an annualised return of 3.5% in the past 20 years. Source: https://dqydj.com/nikkei-return-calculator-dividend-reinvestment/ https://dqydj.com/nikkei-return-calculator-dividend-reinvest...