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OK thanks! now to figure out how to calculate that as an annual rate of return (APY?) Sounds like this was through 2021, already a bit old? If I plug this into

OK thanks! now to figure out how to calculate that as an annual rate of return (APY?) Sounds like this was through 2021, already a bit old? If I plug this into a random calculator on the web without knowing what I'm doing, $10K to $170K over 20 years looks like... around 15.25%? That does seem quite high, can that be right?

belter 4y ago
Like Warren Buffet said...nothing like just buying the index and enjoying it... https://www.investopedia.com/ask/answers/042415/what-average-annual-return-sp-500.asp https://www.investopedia.com/ask/answers/042415/what-average... "The average annualized return since adopting 500 stocks into the index in 1957 through Dec. 31, 2022, is 10.15%." "Over the past 20 years (2002 to 2022), the average annualized return on the S&P 500 is 8.19%."
- jrochkind1 4y ago
  Thanks, that seems more realistic than the 15% I incorrectly came up with. 10% is what I had in my head as a very good but possible managed fund return -- and only 8% over the past 20 years instead of an unrealistic 70. This seems like a more realistic expectation. So a conclusion might be: if you've been getting less than 8% (after fees) over ~10 years in any managed fund... you might want to reconsider your investments, seems like. But if you've been getting 8-10% or more, you're pretty good. Does that make sense?
  - belter 4y ago
    I hope you realize these are extraordinary returns. Show me an active manager that can demonstrate consistent 8% returns over the last 20 years, and I will be at their door next Monday 08.00 AM.
    - jrochkind1 4y ago
      I _think_ I know of one but I may be misinterpreting. But then, if you know this... have you switched any actively managed to funds to an S&P index fund? Why would this not be the obvious thing to do?
      - belter 4y ago
        Investing with S&P index fund is the obvious thing to do. :-)
    - jrochkind1 4y ago
      This page from Jan 2022 suggests average fund returns over the previous 15 years (so that did include the bear market 2008, at that point, the article mentions) for "U.S. Large-Cap Stock" was 9.73% https://www.thebalancemoney.com/what-is-the-average-mutual-fund-return-4773782 https://www.thebalancemoney.com/what-is-the-average-mutual-f... It does note that that includes "the average for all mutual funds, including index funds." But if the answer is "oh yeah, the index funds bring up the average a lot"... why would anyone use anything but an index fund? Is it going to be a lot lower than that over 20, even though that already includes 2008? I admit this is all pretty confusing to me. What returns would you consider acceptable over 10-20 years? Or do you not even look at past returns when deciding whether to keep your money in a given fund, or invest in a given fund?
      - belter 4y ago
        I am with Nicholas Taleb. Past returns are no guarantee. And in any case... “They will envy you for your success, your wealth, for your intelligence, for your looks, for your status - but rarely for your wisdom.” ― Nassim Nicholas Taleb, The Bed of Procrustes: Philosophical and Practical Aphorisms
        jrochkind1 4y ago
        I mean, that makes sense, but I'm having trouble understanding the practical implications. If not on past returns, how do you decide where to invest your money? Have you ever decided to remove your money from a fund, on what basis would you make that decision? There is _no_ returns that would cause you to re-evaluate your current investments? If you were invested in a fund that had given you say an average of 0.5% a year over the past 10 years, that would not cause you to re-evaluate your investment?
        belter 4y ago
        > If you were invested in a fund that had given you say an average of 0.5% a year over the past 10 years, that would not cause you to re-evaluate your investment? What about dividing funds for investment in three parts? 1-> Give to an active investor you respect 2-> One third to an Index Fund 3-> Last manage it yourself. Compare performance after 5 years :-)
reducesuffering 4y ago
Use a tool like https://www.portfoliovisualizer.com/backtest-portfolio https://www.portfoliovisualizer.com/backtest-portfolio

belter 4y ago

Like Warren Buffet said...nothing like just buying the index and enjoying it... https://www.investopedia.com/ask/answers/042415/what-average-annual-return-sp-500.asp https://www.investopedia.com/ask/answers/042415/what-average... "The average annualized return since adopting 500 stocks into the index in 1957 through Dec. 31, 2022, is 10.15%." "Over the past 20 years (2002 to 2022), the average annualized return on the S&P 500 is 8.19%."

jrochkind1 4y ago
Thanks, that seems more realistic than the 15% I incorrectly came up with. 10% is what I had in my head as a very good but possible managed fund return -- and only 8% over the past 20 years instead of an unrealistic 70. This seems like a more realistic expectation. So a conclusion might be: if you've been getting less than 8% (after fees) over ~10 years in any managed fund... you might want to reconsider your investments, seems like. But if you've been getting 8-10% or more, you're pretty good. Does that make sense?
- belter 4y ago
  I hope you realize these are extraordinary returns. Show me an active manager that can demonstrate consistent 8% returns over the last 20 years, and I will be at their door next Monday 08.00 AM.
  - jrochkind1 4y ago
    I _think_ I know of one but I may be misinterpreting. But then, if you know this... have you switched any actively managed to funds to an S&P index fund? Why would this not be the obvious thing to do?
    - belter 4y ago
      Investing with S&P index fund is the obvious thing to do. :-)
  - jrochkind1 4y ago
    This page from Jan 2022 suggests average fund returns over the previous 15 years (so that did include the bear market 2008, at that point, the article mentions) for "U.S. Large-Cap Stock" was 9.73% https://www.thebalancemoney.com/what-is-the-average-mutual-fund-return-4773782 https://www.thebalancemoney.com/what-is-the-average-mutual-f... It does note that that includes "the average for all mutual funds, including index funds." But if the answer is "oh yeah, the index funds bring up the average a lot"... why would anyone use anything but an index fund? Is it going to be a lot lower than that over 20, even though that already includes 2008? I admit this is all pretty confusing to me. What returns would you consider acceptable over 10-20 years? Or do you not even look at past returns when deciding whether to keep your money in a given fund, or invest in a given fund?
    - belter 4y ago
      I am with Nicholas Taleb. Past returns are no guarantee. And in any case... “They will envy you for your success, your wealth, for your intelligence, for your looks, for your status - but rarely for your wisdom.” ― Nassim Nicholas Taleb, The Bed of Procrustes: Philosophical and Practical Aphorisms
      - jrochkind1 4y ago
        I mean, that makes sense, but I'm having trouble understanding the practical implications. If not on past returns, how do you decide where to invest your money? Have you ever decided to remove your money from a fund, on what basis would you make that decision? There is _no_ returns that would cause you to re-evaluate your current investments? If you were invested in a fund that had given you say an average of 0.5% a year over the past 10 years, that would not cause you to re-evaluate your investment?
        belter 4y ago
        > If you were invested in a fund that had given you say an average of 0.5% a year over the past 10 years, that would not cause you to re-evaluate your investment? What about dividing funds for investment in three parts? 1-> Give to an active investor you respect 2-> One third to an Index Fund 3-> Last manage it yourself. Compare performance after 5 years :-)

reducesuffering 4y ago

Use a tool like https://www.portfoliovisualizer.com/backtest-portfolio https://www.portfoliovisualizer.com/backtest-portfolio