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Of course, I am not talking about WSB like "investing". Long-term investments is basically 8% per year when holding long-term (e.g., more than 10 years). In o

Of course, I am not talking about WSB like "investing". Long-term investments is basically 8% per year when holding long-term (e.g., more than 10 years). In other words, your capital doubles every 10 years. Inflation is slower than that.

whiddershins 7y ago
8% is a very high estimate. I go with 4, myself.
- account73466 7y ago
  Don't forget about dividends. If you account for 10 years, then 8% is pretty conservative. If you plan to hold for less than 10 years, then things are much more uncertain in both directions.
- blackearl 7y ago
  The common estimate is 7% averaged over 10 years with a lazy portfolio. You can do better than 4% even if you do a long term target-date fund like Vanguard's 20XX retirement funds since the fees are so low.
  - perl4ever 7y ago
    If you bought long term government bonds in the early 80s at double digit interest rates, your returns over the next 30 years were very comparable to stocks. Is it safe to assume that stocks over the next 30 years will return more than the 2-and-a-little % of 30 year government bonds right now?
- icelancer 7y ago
  You are being downvoted for some unknown reason. 8% is a high estimate and people simply averaging the past and coming up with that number as a reasonable predictor of the future are the ones slamming the downvote button in hopes that you are wrong. 1989-2019 with dividends reinvested and inflation controlled show a return of 7.3% in the S&P 500 index. But 1959-1989 with the same parameters shows a return of 4.96% by just moving the time period back 30 years. Arbitrary endpoints can make you justify anything, including double digit returns. But people who are saving money in the equities market that gets ever more crowded with index funds and ever more efficient should probably not count on 7-8% returns as the canonical amount they're getting back. They should plan on 5% or lower and be happy with higher returns if they come.
  - account73466 7y ago
    7-8% is not an arbitrary number and the reason why 1959-1989 is different is because the % of money printed was different in that period. Currently, we are doubling money supply every 10 years, therefore one should ok to expect 2x in stocks because there is no other significant place for money to go to.
    - icelancer 7y ago
      Yeah? You feel confident that is going to continue for 30 years for sure?
      - account73466 7y ago
        Not necessarily only US stocks but printed money have to go somewhere and they will be printed as the only pacific way to nullify previous debt.
    - perl4ever 7y ago
      In the 70s and early 80s inflation sent stocks to depths that people today can't even imagine. They joked about American industry being worth more dead than alive. The P/E ratio of the S&P 500 got into the 7s! So why does historical experience show that inflation is so bad for stocks, if it seems logically to you to be good?
  - perl4ever 7y ago
    I kind of think I read something that compared long term treasuries from the early 80s and stocks and found that the treasuries returned just as much since then. It seems possible that is the way in which the future will resemble the past. 30 year treasuries currently yield 2.35%, so it seems to me going out on a limb to assume that efficient markets allow for stocks to be significantly better. The rate for long term treasuries in the very early 80s was right in the double-digit or near double digit range that people now feel entitled to for stocks. With bonds, you can't deceive yourself as easily about the possible future. So doesn't that constrain stocks? https://www.macrotrends.net/2521/30-year-treasury-bond-rate-yield-chart https://www.macrotrends.net/2521/30-year-treasury-bond-rate-... ...and if market returns over the next 30 years are going to be 2.35%, and you get to pay taxes and then have even minimal inflation, then it looks kind of irrational to take any risk at all, unless you basically have the same psychology of a lottery player.

whiddershins 7y ago

8% is a very high estimate. I go with 4, myself.

account73466 7y ago
Don't forget about dividends. If you account for 10 years, then 8% is pretty conservative. If you plan to hold for less than 10 years, then things are much more uncertain in both directions.
blackearl 7y ago
The common estimate is 7% averaged over 10 years with a lazy portfolio. You can do better than 4% even if you do a long term target-date fund like Vanguard's 20XX retirement funds since the fees are so low.
- perl4ever 7y ago
  If you bought long term government bonds in the early 80s at double digit interest rates, your returns over the next 30 years were very comparable to stocks. Is it safe to assume that stocks over the next 30 years will return more than the 2-and-a-little % of 30 year government bonds right now?
icelancer 7y ago
You are being downvoted for some unknown reason. 8% is a high estimate and people simply averaging the past and coming up with that number as a reasonable predictor of the future are the ones slamming the downvote button in hopes that you are wrong. 1989-2019 with dividends reinvested and inflation controlled show a return of 7.3% in the S&P 500 index. But 1959-1989 with the same parameters shows a return of 4.96% by just moving the time period back 30 years. Arbitrary endpoints can make you justify anything, including double digit returns. But people who are saving money in the equities market that gets ever more crowded with index funds and ever more efficient should probably not count on 7-8% returns as the canonical amount they're getting back. They should plan on 5% or lower and be happy with higher returns if they come.
- account73466 7y ago
  7-8% is not an arbitrary number and the reason why 1959-1989 is different is because the % of money printed was different in that period. Currently, we are doubling money supply every 10 years, therefore one should ok to expect 2x in stocks because there is no other significant place for money to go to.
  - icelancer 7y ago
    Yeah? You feel confident that is going to continue for 30 years for sure?
    - account73466 7y ago
      Not necessarily only US stocks but printed money have to go somewhere and they will be printed as the only pacific way to nullify previous debt.
  - perl4ever 7y ago
    In the 70s and early 80s inflation sent stocks to depths that people today can't even imagine. They joked about American industry being worth more dead than alive. The P/E ratio of the S&P 500 got into the 7s! So why does historical experience show that inflation is so bad for stocks, if it seems logically to you to be good?
- perl4ever 7y ago
  I kind of think I read something that compared long term treasuries from the early 80s and stocks and found that the treasuries returned just as much since then. It seems possible that is the way in which the future will resemble the past. 30 year treasuries currently yield 2.35%, so it seems to me going out on a limb to assume that efficient markets allow for stocks to be significantly better. The rate for long term treasuries in the very early 80s was right in the double-digit or near double digit range that people now feel entitled to for stocks. With bonds, you can't deceive yourself as easily about the possible future. So doesn't that constrain stocks? https://www.macrotrends.net/2521/30-year-treasury-bond-rate-yield-chart https://www.macrotrends.net/2521/30-year-treasury-bond-rate-... ...and if market returns over the next 30 years are going to be 2.35%, and you get to pay taxes and then have even minimal inflation, then it looks kind of irrational to take any risk at all, unless you basically have the same psychology of a lottery player.