5 ms·
5% real return is a scary thing to try to tie the rest of your life to.
by aetherson 4y ago
5% real return is a scary thing to try to tie the rest of your life to.
- sneak 4y agoPerhaps they can buy an annuity or something that will bank on 7% average annual over a 20-30 year timespan and guarantee 5% real return each and every year.
- aetherson 4y agoDoes such a product exist? I would be surprised if it does. (I played with Schwab's annuity estimator and it basically refused to give me an estimate)
- aetherson 4y agoNow that I'm back in front of a computer instead of a phone, I looked up: https://www.bankrate.com/investing/annuity-calculator/ https://www.bankrate.com/investing/annuity-calculator/ It suggests that for an annuity with a 2% annual growth (which at least maybe approximates "flat real rate of return,") for 30 years, it'll give you about 3.7%, not 5%.
- ericd 4y agoPretty sure a guaranteed 5% real return in perpetuity doesn’t exist. My understanding is that annuities are generally very vulnerable to inflation?
- badpun 4y agoIf such annuity existed, people wouldn’t put money into index funds :) They have similar or smaller average expectations there, but with no guarantees and with massive volitality.