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you may want to actually run those numbers ha ha ha ha , never shoot from the hip because you THINK you guessed the right time frame to make a point....
1965-1995 averaged 12.00% with reinvested dividends, cagr 10.77%
1985-dec 2014 averaged 12.93% with reinvested dividends , cagr 11.40%
less than 3/4% difference in what you thought CRUSHED the other time frame
i will say it again , it is time in the markets not timing the markets that make money.
well you said 1995 but even so . 1-1/2 % is CRUSHNG ?
face it you tried to make a point and blew it. in the scheme of things over a 30 year period 1-1/2% difference is very tiny. hardly crushing at all. you are talking a fund expense .
the mere fact you added money over time at different points or rebalanced could negate that difference in the real world.
well you said 1995 but even so . 1-1/2 % is CRUSHNG ?
face it you tried to make a point and blew it. in the scheme of things over a 30 year period 1-1/2% difference is very tiny. hardly crushing at all. you are talking a fund expense difference
So then you think an Expense Ratio of 1.5% vs. .05% is hardly a difference re-invested over 30 years. Fair enough. I guess we will just agree to disagree
when you are talking market averages 1-1/2 % difference over 30 years is normal no matter what time frames you pick. the truth is the long term averages for 30 years are going to be so close most of the time.
i would hardly call any time frame with a cagr difference of 1-1/2% crushing the other. in the scope of this discussion i wouldn't even bring it up as worthy of even making a point .
just rebalancing or adding money at different points as is done in the real world will skew that difference one way or another.
no one gets those returns in practice because we all have different buy in points , different rebalance points , we add money at different times , some dollar cost average in and we all sell at different times.
all would make that 1.50% difference vanish or grow larger , take your pick
Even 1/2 % can make a big dollar difference if you go out enough years but that still does not mean a half percent is a big difference.
Last edited by mathjak107; 06-09-2015 at 06:25 PM..
when you are talking market averages 1-1/2 % difference over 30 years is normal no matter what time frames you pick.
It's not an average. It's a True CAGR, they end up being huge differences over time. My main point was to say that you did great on your real estate investment, but you happened to be in a time where NYC real estate boomed during your ownership. Had you bought that same building 20 years earlier and sold in 1993 your results may have been very different. That is market timing, I never said you purposefully timed the market, just that you got lucky with when you made the purchase. If you expected that to happen every 30 years all of your money should have been in real estate in NYC and still should be. You said it was work, but if you beat the market so handily and you expect to beat the market handily over the next 30 years why not hire a property manager?
can't say , if i bought those apartments 20 years ago i may have gotten a better deal. 20 years ago rent stabilized apartments had rents much further behind than the last 15 years or so when increases have been real world . i may have purchased my share proportionately less.
time frames are all interlaced and one time frame has a lot to do with another.
1987 to 2003 were 17 years of the greatest bull market in history. almost 14% average returns . what a great time frame for investing. if you want crushing compare that to the 17 years from 1998-2015 of 8.29%. now that is my definition of crushing.
only one problem. the high inflation time frames leading up to those years made it impossible for the average person to save much or at all.. so when the party arrived few had managed to have any savings . 401k's didn't even exist yet in most work places..
so here come the great times and most folks are starting at ground zero with near nothing saved yet to even take advantage. .
luck and skill always plays a part. but that can be said in any time frame.
so yeah you can pull a time frame out of history and go wow those people were lucky in that time frame. but the time frame before had those same folks you call lucky being eaten up by high inflation and no money saved or even had 401k's even existing.
understand now why pulling chunks of time out and calling it lucky time frames may mean little without looking at the time frame prior in the real world ?
how you do is a personal thing unique to only you. you had people making good money in the great depression because they found ways.
Last edited by mathjak107; 06-09-2015 at 06:05 PM..
So you are saying it's easy to become a millionaire in NYC or San Fran, but hard in Indiana unless you are from a place like NYC or San Fran?
The value of a home is irrelevant as homes are terrible investments. A person that rents and invests their 20% down along with the interest from a monthly mortgage payment will very likely become a millionaire before the person with the home, so paying down a mortgage on a more expensive home is hardly an argument for saying a person has a higher probability of being a millionaire.
I'll take a 250k mortgage you take a 1 million dollar mortgage we will see who gets to a million in networth first and I will give you a 35% higher income in NYC.
You're a little confused here. It is NOT that the SF people have million dollar mortgages. They bought $50,000-100,000 homes decades ago that have appreciated in value by $900,000-950,000. SF bay area properties have consistently DOUBLED in value every dacade for at least the last 50 years! You also are failing to account for the increasediving costs of rent. Median in SF just reached $4250.
On this business of living in a high income and cost area versus a low income and cost area, I believe you will should be wealthier in the long run in a high income/cost area. Your lifestyle isn't necessarily much better for 10-15 years as so much of your income goes to your rent or mortgage. But if you buy, you can decrease your taxes for the interest and property taxes....in the long run, you will have a paid for asset that's worth $1M or so. The one thing you cannot necessarily count on is increase in house value even if you are in a high income area...I'm pretty sure Detroit was high income 40 years ago.
It's not an average. It's a True CAGR, they end up being huge differences over time. My main point was to say that you did great on your real estate investment, but you happened to be in a time where NYC real estate boomed during your ownership. Had you bought that same building 20 years earlier and sold in 1993 your results may have been very different. That is market timing, I never said you purposefully timed the market, just that you got lucky with when you made the purchase. If you expected that to happen every 30 years all of your money should have been in real estate in NYC and still should be. You said it was work, but if you beat the market so handily and you expect to beat the market handily over the next 30 years why not hire a property manager?
mathematically cagr and average amount to the same thing. the values are different percentage wise but they equal the same dollar figure at the end of the day . they are different roads to the same place .
in that calculator above a 10.77% cagr can also be expressed as a 12% average return . cagr just represents the sequence those gains and losses came in but whether you expess it as a 12% average return or a 10.77 cagr return you will arrive at the same value.
Last edited by mathjak107; 06-10-2015 at 04:12 AM..
mathematically cagr and average amount to the same thing. the values are different percentage wise but they equal the same dollar figure at the end of the day . they are different roads to the same place .
in that calculator above a 10.77% cagr can also be expressed as a 12% average return . cagr just represents the sequence those gains and losses came in but whether you expess it as a 12% average return or a 10.77 cagr return you will arrive at the same value.
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