4 ms·

I want to agree with you, except that almost all of the salescritters for these products promote them as "beating the market." They _have_ to sell them this way

I want to agree with you, except that almost all of the salescritters for these products promote them as "beating the market." They _have_ to sell them this way because if their customers had any idea what the whole-market returns actually were, they wouldn't pay extra for the privilege of a far riskier (and lower-performing, on average) investment. And the S&P 500 returns more like 10% per year. A bit higher if you cherry-pick your start and stop dates. I've only seen people use 7% for portfolio value estimation purposes, after adjusting for an assumed 3% inflation.

HFguy 2y ago
SP500 had not returned 10% a year historically. And really would want to look at returns above the cash rate. And the SP500 has had unusually good performance relative to other equity indexes. Would not count on that forever.
- rancar2 2y ago
  Given that the rise and fall of companies from SP500 status, this is a bet on the selection criteria.
TeaBrain 2y ago
Those returns depend on when you invest. The inflation adjusted annualized return of the S&P 500 was negative from January 2000 to January 2013 at -0.25%. The inflation adjusted total annual return from January 2000 to January 2024 was 4.5%. https://ofdollarsanddata.com/sp500-calculator/ https://ofdollarsanddata.com/sp500-calculator/
- bityard 2y ago
  Sure, you can get lower returns as well by cherry-picking the start and stop dates, especially for shorter intervals. When economists say things like, "the market returns X on average," they always mean over much longer periods of time than your example.
  - TeaBrain 2y ago
    The figure till 2013 was just food for thought. Inflation adjusted returns for the S&P 500 for the last 50 years are around 7-8%. I'm certainly not suggesting anyone stay out of a S&P 500 index fund, as I wouldn't take that advice myself. However, the return from 2000 to 2024 is not a cherry pick for anyone old enough to have had their money invested back in 2000, as it shows that there has only been a 4.5% real return on the money then invested since the 2000 peak.

HFguy 2y ago

SP500 had not returned 10% a year historically. And really would want to look at returns above the cash rate. And the SP500 has had unusually good performance relative to other equity indexes. Would not count on that forever.

rancar2 2y ago
Given that the rise and fall of companies from SP500 status, this is a bet on the selection criteria.

TeaBrain 2y ago

Those returns depend on when you invest. The inflation adjusted annualized return of the S&P 500 was negative from January 2000 to January 2013 at -0.25%. The inflation adjusted total annual return from January 2000 to January 2024 was 4.5%. https://ofdollarsanddata.com/sp500-calculator/ https://ofdollarsanddata.com/sp500-calculator/

bityard 2y ago
Sure, you can get lower returns as well by cherry-picking the start and stop dates, especially for shorter intervals. When economists say things like, "the market returns X on average," they always mean over much longer periods of time than your example.
- TeaBrain 2y ago
  The figure till 2013 was just food for thought. Inflation adjusted returns for the S&P 500 for the last 50 years are around 7-8%. I'm certainly not suggesting anyone stay out of a S&P 500 index fund, as I wouldn't take that advice myself. However, the return from 2000 to 2024 is not a cherry pick for anyone old enough to have had their money invested back in 2000, as it shows that there has only been a 4.5% real return on the money then invested since the 2000 peak.