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you can see at the bottom left how the differences in cagr vary based on the asset type. bonds have a little spread and cash hardly at all so any funds cagr and sensitivity to sequence risk is based on how much stock , bonds and cash it holds .
a balanced fund would have a smaller worst case spread than an aggressive growth fund .
Dude you are saying the same thing I have been saying. You are arguing with me JUST to argue. What in the hell are you disagreeing with me on? Do you know?
If you review what you have been saying and WHAT I have been saying, we are saying the same thing in relation to the Balance Fund's CAGR.
From what you are telling me with your responses I don't see where you are disagreeing with anything I have already said about Balanced Fund's CAGR.
I never at one time have said that the S&P's CAGR will equate the same as a Balanced Fund's CAGR, because with a Balanced Fund you don't have 100% Stocks, you have a portion (let's say 40%) of Bonds, which would not have as much of a difference between the Average Return and the Compounding Rate JUST LIKE the Average Return on the Long Term CDs are not that far off from the Compounding Rate.
We are saying the same thing, you are arguing just to argue.
Last edited by jotucker99; 08-23-2015 at 08:15 PM..
You should also take a look at the permanent portfolio in which 1/4 is stock, 1/4 bond, 1/4 gold, and 1/4 cash/cd. The strategy has yielded 9% return for a couple of decades.
Dude you are saying the same thing I have been saying. You are arguing with me JUST to argue. What in the hell are you disagreeing with me on? Do you know?
If you review what you have been saying and WHAT I have been saying, we are saying the same thing in relation to the Balance Fund's CAGR.
From what you are telling me with your responses I don't see where you are disagreeing with anything I have already said about Balanced Fund's CAGR.
I never at one time have said that the S&P's CAGR will equate the same as a Balanced Fund's CAGR, because with a Balanced Fund you don't have 100% Stocks, you have a portion (let's say 40%) of Bonds, which would not have as much of a difference between the Average Return and the Compounding Rate JUST LIKE the Average Return on the Long Term CDs are not that far off from the Compounding Rate.
We are saying the same thing, you are arguing just to argue.
dude ! you are so blind to what you say . did you not write the quote below which is what we are disagreeing with and telling you that
1: you can't knock 1 to 2% off a balanced funds return and wellington is a balanced fund with the same composition as fidelity balanced fund . wellington is 2/3 stock 1/3 bonds
2: you can't project with cagr returns because they are to sensitive to sequence risk and can only indicate the past .
you wanted to take off 2% from the balanced fund/ wellington return and that is wrong .
the 15 year CAGR for vwelx is 7.41% on morningstar not 5.25%
the 10 year average return on vanguard is 7.83 the morningstar cagr is 7.40
is that 2% difference to you ???????????????????????????????????????? the difference between average and cagr in this case is less than 1/2%
lets see wellesley , 10 year vanguard average 7.33 10 yr morningstar cagr 7.08 a difference of 1/4%
Quote:
Originally Posted by jotucker99
MathJak,
So with Wellington, I can't find anything beyond a 15 year track record other than going way back to 1929. This is also doing a collective average return of just over 7% at about 7.55% Vanguard Wellington
But again, this is the collective average return, not the compounding rate, in which can't we assume the compounding rate is likely to be about 5.25% for this fund give or take over this same 15 year period?
.
Last edited by mathjak107; 08-24-2015 at 04:26 AM..
- Yes, I said in terms of providing an estimate, you would take the average return and take 1% - 2% off of it. You said with CAGR returns on a fund that's not 100% Stocks, it's hard to do that (provide an estimation) as the Fund is balanced with a significant percentage of fixed income.
- I responded saying that because the fund has at least 50% - 60% Stocks, we should assign some term of "estimation" of the CAGR as it can't be 100% equal to the average return.
- You responded providing resources and information to backup your claim that the CAGR would be difficult to estimate due to ranges showed.
- I posted the results of a Vanguard Fund (LifeStrategy) since 1994 in terms of averages, and then the listing on Morning Star, there was a difference of just under 1%.
- Based on that difference of just under 1%, how was my estimation totally off in saying that the CAGR of the fund would be 1% - 2%? It wasn't 2%, but it was nearly 1% and I did include 1% in my estimation.
- You just posted the Wellington Fund, Vanguard has the Fund at 7.88% over the previous 10 years https://personal.vanguard.com/us/fun...FundIntExt=INT and Morning Star has it at 7.40% over the last 10 years Vanguard Wellington. Now you also said that Vanguard is a little outdated which I can see, but if Morning Star is providing the CAGR information then we have about .50% difference, which is "about" the 1% range that I posted.
MathJak, so we are clear, I will summarize my points once again, you can scroll up in this thread to confirm my points and leave space below them for you to comment:
#1.) Point One: People have been lying about Long Term CDs (over 5 years) not beating inflation over the previous 20 years, I posted information showing the average return and compounding return of CDs over the previous 5 years being over 5%. Inflation averaged about 2.3%, this means that Long Term CDs beat Inflation.
Comment - Based on the information I provided, do you agree or disagree with the notion that over the 20 year period from 1993 - 2013, Long Term CDs averaged 5% and Inflation averaged 2.3%?
#2.) Point Two: Balanced Funds like Vanguard Wellington or Vanguard Life Strategy Funds have had an average return since the same period of about 7.5% - 7.8%. The compounding rate of return on these is not the same as the average rate of return, and I "estimated" (seeing as though I didn't have the CAGR information in front of me) that the CAGR was 1% - 2% lower. MathJak responds saying that Morning Star has the CAGR calculated and it comes out that the CAGR difference is about .50% lower than the Average Rate of Return. So my listing range of 1% was off by at just over .50%, but it wasn't significantly off.
Comment - Based on the information I provided, do you agree that my estimate wasn't totally off? You mentioned that no one can "estimate" the CAGR of a Balanced Fund, which is true which is why my estimate wasn't 100%, but do you think it's "ok" (just "ok") for planning purposes for someone to assign an estimated CAGR to a Balanced Fund? Just for planning purposes?
#3.) Point Three: I said the Balanced Funds had a return of just over 7%, where the Long Term CDs were at about 5%, I said that it might not be worth it to investors to go through the roller coaster ride of 20 years just for an additional 2% or so a year in compounding rate of return. To some it might be worth it, to some it might not. Because we use previous history to predict Stock/Balanced Fund returns, can we not use previous history to predict what Long Term CD rates will average from 2016 - 2036?
Comment - Based on this analysis, do you firstly agree that over the previous 20 year period we are talking a difference of 2% per year? Do you agree with that based on the previous 20 years? Secondly, do you also agree that it would make "sense" for an investor to not want to ride a roller coaster of 20 years just to earn an additional 2% per year? Thirdly, do you still believe that we can only value an investment over the time frame of at least 15 years? If so, would you predict Balanced Funds would do at least over the next 15 - 20 years what they have done the previous 15 - 20 years, and Long Term CDs will perform the same as well?
Last comic standing, we have a winner. It can't get funnier than that.
Make another troll post like this in my thread, and I'm reporting you. If you don't want to read what I have to say, don't click on my thread and put me on your Ignore List. It will stop all of this immature bickering and personal attacks, I have had enough of you guys and your damn personal attacks.
By now you know my stances, if you disagree with them, keep it moving. But these personal attacks won't continue.
Also if you respond agreeing with me about the 7% v.s. 5% situation, then hopefully NOW you understand why I will continue to stay out of the Markets. 2% per year for 20 years is another 40% in total return, I get that, but it's just not worth it to me to have 20 years on a roller coaster.
I only get one life. I firmly believe Long Term CDs will be back over 4% by 2018, if I'm wrong, I might have to update my plans. But I believe they will be at 4% - 4.5% by 2018, inflation will still be about 1.5% - 2% a year, and I will just take my Long Term CD portfolio and go home.
Dave Ramsey says he has a fund that gets him 12% a year, but nobody knows what this fund is. The only way I would consider doing the Balanced Fund is for double digits a year, if we are in single digits and ONLY 2% higher than the Long Term CD averages, no.....not worth it to me.
But if it's worth it to other people, then knock yourself out.
i disagree so you can drop it right there . we do not know what the returns will be , not on cd's , not on stocks , not on bonds . over the next five years i would sooner take my chances with an open ended amount of gains or losses to be fair , than locking in to 2-1/2% cd's . after that the crystal ball is broken other than i would bet the odds 15 years out the balanced fund will grow a whole lot more money than cd's .
Last edited by mathjak107; 08-24-2015 at 07:16 AM..
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