What do YOU think your investment returns will be?
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- Опубліковано 16 вер 2024
- Today we discuss perception vs. reality in investment returns. Are your expectations realistic?
My name is Howard and my goal is to bring UA-cam viewers interesting and factual information about the process of getting to retirement and living a successful retirement, through my channel, Otter's Retirement Corner. I have a degree in Finance, with an MBA from the University of Chicago's Booth School of Business, along with an extensive career in financial services, credit and risk management, within the Banking industry. I have extensively studied retirement topics such as: Social Security, Medicare, investing, economics and portfolio withdrawal strategies, to name a few. My own journey getting to retirement and now living within retirement has allowed me to gain an important perspective on those topics. Note: I am not a financial planner, a tax accountant or an investment advisor and none of the material covered in my videos is intended as personal advice. My videos are for entertainment purposes.
You can email me at: retirementtalk43@gmail.com
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You have a good head on your shoulders. I am still one to three years from retirement. Right now I am 65/15/10/10 equities/bonds/managed futures/gold. I am 60/40 US/International and 50/50 total stock market/small cap value in the equities portion. I backtest at around 8% CAGR, but I anticipate more like 4.5% to 7% CAGR for the next ten years. I am still deciding whether to keep a static allocation throughout retirement or draw from my bonds, managed futures, and gold until they run out, and then stay fully in equities for the remainder of my life. I believe I can live on my bonds, managed futures, and gold for approximately 15 years before they deplete, which would give equities good time to grow before I start using them, and by then I will have, at most, fifteen more years so could assume more risk. But I'm undecided about that strategy.
time: Sounds like you have it figured out.
Great show! Good information. Straight forward. Much appreciated.
Thanks for watching FWM.
Great video Howard! Before I retired I was 70% S&P 500 index fund, 20% stable fund (bonds) and 10% cash. After I retired all got moved around to 30% stocks, 60% bonds and 10% cash. In 9 years or less my stock percentage will hopefully go up compared to our bonds. I am estimating a conservative 5.5% to 6.5% return, these last 19 months since I retired has been more like a 15% gain overall. I've been involved with the market on and off since 1982, a few times it was not smooth sailing but in the long run it has been very good for us overall...
bob: Good plan.
One way to plan for your retirement is not to plan. Then find some older widow who inherited money and move in with her. Sarasota Tim.
I get it.
Thanks for the post Howard !
Thank you, Vincent.
My return expectation is close to yours, 5-8% annually. So far, our investments have returned 12% this year, almost 6 months. We are 65/35 equities/bonds. We keep some cash to handle market opportunities and we have couple homes that have really increased in value over the past few years, probably 30% increase in 2.5 years.
Been retired almost 5 years and have much more money now than I did when I retired. I’m happy.
RD: Isn't it fun to spend a bunch of money and then see you still have more than you started with?
Yes, I understand that the Fed is in charge of the money and supposedly a whole separate entity of the US government. No matter how you want to look at it. The debt goes higher and higher , and the Fed is now buying most of their own T- Bills. And you are correct stocks historically have been one of the greatest investments in the history of the United States. But I believe we’re an uncharted water in my personal opinion is it’s time for wealth preservation. Thanks for the reply. I do enjoy the channel. Have a good day.
atti: The Fed is actually not a part of the government. They act independently. The Fed has not bought any government debt for over three years and has been reducing their holdings of previously purchased debt.
I am now 71, started SS at 70. I just bought an annuity and have a small pension. I am 50/50 stocks to bonds/cash. I don't try to calculate future returns as my income alone covers expenses.
Good place to be.
I thought the more of your expenses you have covered, the more aggressive you could be with your money outside of that because you don't need the money.
@@fj5690 I didn't say i don't need the money, I said that I have cash for 2-3 years. Each year i have to add to my cash from stocks or bonds. most of the time that money will come from bonds and my stock allocation will naturally grow.
@@fj5690 I hate losing money more than I like gaining money. A conservative 50/50 split for my age seems reasonable. No worries.
@@fj5690 At age 71 there is not a lot of market recovery time available, his 50% is aggressive given his age. At age 41 he would have a 20 years hands off let the market recover window, not so much at age 71.
We're 9 months into retirement. Our allocation moved from 80/20 five years out, to 60/40 at retirement. We're projecting conservatively at 4.5% returns currently.
Thanks, Dexters.
I’m getting between 10%-12% a year on various investments between 401K and stock. Then about 5% on CD.
Got some bonds that are maturing….. like that.
Same here
Same here........
Tom: What's in the 401K?
@@RetirementTalk43 Small. Less than 1/4 mil. But from a previous employer that I can’t add to anymore. I just let sit earning about 12% until I need it. Hopefully never.
@@tomspallone1868 You are probably better off moving that 401K to an IRA, where you will have lower fees and more investment flexibility.
Good video Howard. I think your allocation sounds good at 52/38/10% cash. I’m 65 and much more aggressive but need to think about getting closer to your allocation. Thoughtful video, thanks.
Tom: I have low stock allocation because of the way I intend to withdraw funds, which will come mostly from bonds. The stock allocation will grow over time.
@@RetirementTalk43 Aha, that makes sense. I’m having a little trouble implementing the proper allocation because most of my investments are in a Roth IRA. Should I put more bonds in my taxable account or my Roth?
@@tombkk1322 Bonds work best in the IRA, for tax reasons.
@@tombkk1322 Yes, so bonds don't go in the Roth. My small cap stocks go in my HSA and Roth.
@@RetirementTalk43 Thanks for your patience, Howard. Have a great night.
I'm planning on around 4%, I do have a great pension and no debt with SS, so don't need to tap my investments
Thanks.
Long term care costs (nursing home care) I have learned a lot about last few years. My mother basically spent all her existing resources (cause necessary) and now is approaching Medicaid for her nursing home care. I’m not sure most people can “invest” their way thru $12:000 a month nursing care. It’s changed my view point of worrying about investing my nest egg and I saved a lot. I think in the end all the “investment” ends up in the hands of those providing nursing home services
This is absolutely true. Same thing happened to my father. Doing extremely well in retirement until the in home care was needed. It went down hill from there. Sad to say this but fortunately he passed away before major selling of assets had to occur. He had dementia pretty badly so for the last year he didn’t know what was happening. I told my daughter, please don’t let this happen to me. Just put me in home.
watchdog: Sadly, that happens to people of lesser means.
@@RetirementTalk43 I’m thinking and watching up close..I think it happens to a lot more people than you realize. A million $ doesn’t last as long as one thinks…even if you have hard assets (property) protected..it’s opened my eyes.
@@RetirementTalk43 Im not sure how you define “lesser means”…
@@watchdog242 People without long term care insurance or significant savings.
Howard, is it crazy that I just concentrate on the saving/investing? I don't even consider any return...why? I took a large hit back in 2008 (I was diversified), then divorce, so big setback. It took me 9 years to get back to where I was and I have been diligent.
I never realized how long it takes to save that amount of money. Anyway, I realize I should know my expected returns but honestly with the ups and possible downs, I don't focus on that. Thoughts?
I am laser focused on how much I want to have saved by a certain time. Anything over that (if I am lucky) is icing on the cake I suppose. Your thoughts.
BlueJeans: Do you know your current stock/bond/cash allocation percentages? Time to retirement?
@@RetirementTalk43 Yes and Yes. 60/40 Stocks Bonds = 70% 401K = 20%
Cash = 10% I do have a finacial advisor ( Fiduciary/fee only). Approx. 7 years to go.
@@BlueJeansandJellyBeans Okay, good luck.
@@RetirementTalk43 Thanks!
Every correction recovers and goes higher within 24 months
Yep.
Planning on 6% on my 60/40 portfolio.
Thank you, MJ.
You’re welcome.
That’s based on Vanguard’s 10 year projection for my 4 fund portfolio and the allocation they have set up for me. Right now it’s doing way better than that!
Here is what gets people it is inflation. They score inflation-based returns and non-inflation-based returns in the same format. So, from the Summer of '21 through the Summer of '23 the stock returns were near zero however the inflation rate was high, around 12%. Thus, they falsely think they made money. They can easily have 12% more money but they also have a 12% increase in costs of living.
I am almost 64 and have 3-4 years of cash and a 55/45 stocks/bonds+cash mix. In New Retirement my optimistic return is 5% and pessimistic is 2%. New Retirement's Monte Carlo report looks good. I'll be happy if I can make it to collect Social Security at 70 and still have a chunk of my portfolio left.
yeah interest rates are the best we have seen in MANY years… I’m retireing soon.. I have about 50% in 4.5% long term CD’s… 50% in income stock ETF that gnerate 8%…. I dont need much risk…I do have some in a bitcoin ETF and a couple stocks in AI and weight loss drugs…. I’m good retiring with just 2 to 3 percent long tho. so dont need much risk..
It is nice to be in a position where you don't need a good return.
We're 55% equities 35% fixed income 10% cash. I spend too much time looking at my individual stock holdings of which there are 20. In hindsight I wish I had just done all mutual funds or ETF's. Planning on 4.5% avg returns with dividends reinvesting. I'm 2 years retired. Wife to be done in 6-9 months.
jeff: You can seel all of those individual stocks and switch to an index ETF right now.
@@RetirementTalk43 Thinking about it. Some pay nice dividends though. Others are down so much I'd be cementing losses. VOO would be my ETF choice. Just found your channel and liking it. Subbed.
@@jeffs3627 Thanks Jeff.
When I started back 1992 had no expectations. Over the last 10 years seen some nice growth. Future expectations 7% have been aggressive until 2023 all moneys now goes into fix income investments. MMF, CD's and most recently Roth 401k MMF Mutual Fund. Here I am looking for 3 to 5 % growth. I need tax free money in first 3 years of retirement. This will bridge in case I loose job or something happens. Turned 62 this year and want to squeeze another 5 years and 9 months before officially retiring. I too bought Apple stock 30 shares at 15 dollars everybody made Fun of Me.
Qualls: What percentage do you have in equities?
80% In Equities new contributions all go into Fixed income instrument's.
Over the rest of the year I expect about 5.5%. My portfolio is 1% stock, 90% bonds, 9% cash. I live off my income (pensions, social security, etc.) and add to my investments from my income. I haven't touched my portfolio since I retired, but that had only been 24 years. My cash position will easily cover the rest of my life should I decide to actually touch my cash which I likely won't. I prefer to not worry about the market which is why I only hold one stock.
The only reason I might dip into either my cash position or my portfolio is if I decide to buy a new yacht before I sell my current yacht. However I just looked at yacht prices yesterday and they are too high so I will wait on that. I will likely sell my current yacht in a couple of years since I am aging out of sailing and the current yacht is a sailing yacht. If I sell and don't buy a new yacht, I will have to decide what to do with the money from my current yacht. That scenario will also decrease my expenses which will increase my savings rate. Damn figuring out retirement investing is hard.
Care to mention the name of that stock?
@@RetirementTalk43 AT&T. I bought it in about 2002. The only major blip was when they rolled off WBD and cut their dividend. I sold the WBD immediately . I doubled my portfolio last year when the stock went to about $14. That is the only stock I currently hold.
wow dont get too risky there todd
@@RetirementTalk43 do you believe Todd is telling the truth
@@charleswhite3759 I have no reason to not believe him.
Great video IMO and good advice. I personally am 59 and retired. Have 20% stocks, 30% bonds, and 50% money market and CDs. I only need about a 3% return and am SO SO grateful for the high interet rates we have now. I have cds going out 5 years and some bonds going out 20. I just pray we keep these high rates!!!
You never know when rates will change and for how long.
@@RetirementTalk43 I literally only need 3%, and 30 yr treasuries are over 4 right now. I'm basically locked in.
@@MarkColin-e5r Okay.
50% real estate, 50% financial assets (70/30);
Financial portfolio is basic Rob Berger 4 buckets.
6% expected conservative long term return, 8% optimistic.
Actual return exceeds expected in 1st yr of retirement.
20 year horizon for me; 30 for wife.
Sound.
I'm keeping it as simple as possible as I have no real interest investing myself and my goal is to basically not lose.
When I retired we had enough cash to get by, 7 years, until pension age and then had enough in our retirement funds to be at the best return we could get when they were combined.
Since then we're getting about 5% on our cash but inflation is chewing into that obviously.
Our retirement savings have gone up by about 50% over 4 years and I can basically take money out of that tax free whenever I want to.
Our retirement investments are in a balanced fund which have performed very well over the years and is a mix of various asset classes. I've never changed them.
We're not spending any more than we normally would, maybe less if possible, and we could easily cut down on our insurances if things get really bad.
We're also putting money into things like the vegetable/fruit gardens etc so that if the world does go boom we will still be able to eat/drink and our bills will be covered.
Not a great way to look at it according to traditional wisdom but then again we had plenty of toilet paper recently as well.
old: A little depressing.
@@RetirementTalk43 How so?
Look at how many people got wiped out in 1929 or even 2008?
For us, and most of Australia, the GFC was merely a blip on the radar.
I've just been looking at how much home values in our area have gone up over the last year or two and it's crazy imo.
Weird times.
If I'm wrong and things keep surging we will make more money so I really don't see a downside tbh?
Sarasota Tim says forget stocks and take SS at 62 get gig jobs, and live cheap in a travel trailer….
Hello Howard The only stocks I have now are oil stocks. Most of my money is in real estate, gold, silver, and platinum. I own a house in Ohio and I have a beautiful place in Tennessee on 70 acres on top of a mountain that I hunt I do caving and hike it daily. I have everything paid off with absolutely no debt. I have a UPS pension and will eventually collect Social Security in the next couple years. I have a Metals to keep up with inflation, and if I did need more cash than I have saved, I could always sell a coin here and there and get by for the next 40 years. We’re on unchartered water, the government is printing money to feed the stock market that can’t go on forever with the debt is high as it is eventually, this whole thing is going to come unraveled. And let’s face it getting 6% well it sounds good on the surface. What’s the real inflation rate ? Everything at the dollar store is now $1.25. It looks like it’s 25% to me. We’re not in the 80s and 90s anymore. Things are gonna get ugly at some point. Thanks for the video. God bless.
Attila: I know a couple of guys with UPS pensions after 40 year careers there. They do quite well.
As for printing money, no the government does not do that. Only the Fed can print (create) money and they have not done so for over three years now. As for keeping up with inflation, stocks are a better hedge than metals over the long term.
Howard you may have gotten an email tonight regarding a matter involving Sarasota Tim. It appears to be a prank as the email address is not Tim’s.
Darling: Yeah, I got it. Too bad, I would have loved to have heard from Tim.
@@RetirementTalk43 sorry you got dragged into that. I’m afraid Tim is going to keep ducking you.
I would not lay down on that couch after the Dog finished his business on it ... Jeez... Buy a floor bed for the animal. Humans get the couch... Strange.
coleman: Every dog companion i have ever had, has had free run of the house. There is no reason Otter shouldn't be on the couches or beds. He also has two of his own beds for when he wants to be alone.
So after you earn a return...6 or 7 or 8%...do you account on capital gains taxes? After cap gains...what are your actual returns.
Moe: The largest hit is income taxes, not capital gains, as a majority of my funds are in tax deferred accounts.
@heymoe1179
Hopefully if in Index funds distributions would be trivial.
If withdrawing, depending how much money you are talking, you can take out quite bit. If married you can take out Up to $89,250 tax free and I think that is after standard deductions. Then including standard deduction and Roth money, to me, with careful withdrawal strategies, it can be an almost non issue. After that its 15% to 553, 850 in 2024. If someone is that wealthy hats off to them.
For me it is the freaking traditional IRA that messes up everything. How I wish I'd have just paid the taxes and put in an index fund.
@@ThorIsBoss Here also...I have a significant Trad IRA that I don't want to draw from because of taxes...so waiting until my income falls later in retirement so I don't get hurt too bad.
@@heymoe1179 I was planning on spending it down and/or Roth converting now I'm stuck. Too many competing priorities. I'd like to minimize RMDs to keep SS non taxable if possible.