Quote:
|
Originally Posted by smooth
according to the article, you need to achieve a rate of return over 3% above inflation to break even. You don't just get to look at whether one obtains a 10% return, but that return minus the average rate of inflation from 1925 to 2004 (measured by the CPI), which has been 3.1%. So that places your real rate of return closer to 6-7%.
|
Any way you look at it, it is a far better return than SS.
Quote:
|
Originally Posted by smooth
a) are you going to get to invest in the S&P 500? so I guess I'm just wondering what relevance it is to post the rate of return for the S&P 500 if you don't get to invest in it.
|
There are mutual funds designed to match the SP500. I use Schwab's.
Quote:
|
Originally Posted by smooth
b) hopefully you don't turn 70 on any of those down decades, or your retirement will be sitting on the floor and you'll be waiting for 15 years for it the market to regain traction.
|
I think 15 years is a bit long but you have a good point. That's why as you get older you should re-balance your holdings to include more fixed income funds.
Quote:
|
Originally Posted by smooth
c) I am more interested in the median rate return, which is resistant to outliers. Both the mean and the median are "averages," so which one is being used here? I suspect the mean is since that portrays the average in a better light than the other two measurements: the median and the mode (which one might also be interested in knowing, since that gives the most often occurence).
|
I don't know.
Quote:
|
Originally Posted by smooth
All this ignores my larger concern regarding the one point in time someone decides to run off with your money or any large dip in the market. it only takes once and you are screwed if it happens at the wrong time (e.g., right when you retire)
|
By using mutual funds that follow the entire market, no one or two bad stocks will effect overall performance much.