3 ms·
Why such a conservative rate of return? There is no 35 year period where the inflation adjusted return was below 7%. Why use a 5% real rate of return for this
by dlp211 5y ago
Why such a conservative rate of return? There is no 35 year period where the inflation adjusted return was below 7%. Why use a 5% real rate of return for this analysis?
- AYBABTME 5y agoIt's funny because I was asked by someone else why such an aggressive rate of return! * * * Just went off numbers in my head, I think there's lots of % people talk about, and 7% is what I've got stamped in my brain about expected return of an S&P 500 ETF over a long period. Might be wrong, but that's the number I use for napkin math.
- medvezhenok 5y agoCherry-picking dates, but the return from 1929 to 1974 (45 years, not 35) was 7.2% nominal, and only 4.76% inflation-adjusted. https://www.officialdata.org/us/stocks/s-p-500/1929?amount=100&endYear=1974 https://www.officialdata.org/us/stocks/s-p-500/1929?amount=1... Alternatively, 1972-2009 (37 years) gives an inflation-adjusted 5.17% https://www.officialdata.org/us/stocks/s-p-500/1972?amount=100&endYear=2009 https://www.officialdata.org/us/stocks/s-p-500/1972?amount=1... (To be fair, that's from lump-sum investing at the worst time, if you DCA the returns should be better than the numbers above)