4 ms·
7% real return is a relatively high assumption. In the article Ritholtz assumes 8% nominal returns and 2-3% inflation, so 5-6% real returns. Even assuming 5% re
by yellowstuff 8y ago
7% real return is a relatively high assumption. In the article Ritholtz assumes 8% nominal returns and 2-3% inflation, so 5-6% real returns. Even assuming 5% real returns is somewhat optimistic. Developed countries in the last 100 years or so have achieved that, but most places in most time periods have not.
- CompelTechnic 8y agoIt is true that the U.S. over the last ~150 years has outperformed a lot of the world, but it maintained 7% real over that period of time. Ritholtz was all over the damn place in his article, and attacks the strawman of 12% growth. In comparison 7% has some backing. Due to volatility, it is unsafe to retire on a planned drawdown rate of 7% (4% is a good rule), but it isn't unrealistic to expect 7% growth.
- im3w1l 8y agoI'd argue that you can beat the market. And poor people especially. What? Heresy? No I don't mean by stock picking. I mean by investing in yourself. Imagine if you save up enough money that you avoid having to take out a payday loan. Or imagine if you have sufficient money that you aren't in chronic stress mode, and can think about your long term future instead of worrying about the next meal. Or being able the upfront cost of bulk buying. Or maybe you can buy high quality tools and gear that allow you to do your job more efficiently. If you can start a virtuous cycle in your personal finances that can create huge excess returns.