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Old 04-03-2015, 01:06 PM
 
Location: Living on the Coast in Oxnard CA
15,726 posts, read 26,748,770 times
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Quote:
Originally Posted by Petunia 100 View Post
You'd have to realize 11% CAGR. How will you do that?
Model it and see what happens. Model it from any time frame in the past 200 years and see what happens. Remember you start at age 20, save for 6 years and stop saving then let it ride for until you are 65. I guess you can start at any age, you just need those additional years to let it grow.
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Old 04-03-2015, 01:08 PM
 
2,292 posts, read 1,558,471 times
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Quote:
Originally Posted by ACWhite View Post
That is simply not true. Read the studies published in good, refereed journals in economics, industrial psychology and management. Nearly all of them control for most, if not all, the factors identified in earlier posts. Nearly all find a sizable remaining gap. And that is with RECENT data.
In this day and age men and women in the same job classification generally (but probably not 100% of the time) make he same amount of money. Why would a business hire someone and not pay them market value? Why would a gender take the job if not paid market value? They'd go somewhere else where their skills are wanted. There's no reason for a buisness not to hire good people and pay them market value. I don't believe there's a mass conspiracy going on.

I would agree that equal pay for equal work was not in effect in the past. I don't believe that's the case now, and if it is, it's very very rare.

Last edited by Burkmere; 04-03-2015 at 02:32 PM..
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Old 04-03-2015, 02:05 PM
 
Location: CT
3,461 posts, read 1,853,604 times
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Another part of the problem is that the average Joe doesn't understand the market, and therefore, makes costly mistakes which the lords of Wall Street are all too happy to accomodate. A properly managed portfolio needs constant rebalancing to insure good (not great) return during a bull market, and minimize losses when the bear rears it's ugly head. Unfortunately all too many people react to the market and make the mistake of selling low, then trying to buy back in on the bounce and prices escalating. I let someone who knows what they are doing take care of it for me, since my IRA is the primary source of my retirement income, I'm not messing around with it.
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Old 04-03-2015, 02:51 PM
 
8,820 posts, read 5,119,154 times
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Quote:
Originally Posted by SOON2BNSURPRISE View Post
Model it and see what happens. Model it from any time frame in the past 200 years and see what happens. Remember you start at age 20, save for 6 years and stop saving then let it ride for until you are 65. I guess you can start at any age, you just need those additional years to let it grow.
I did, and you'd need to realize 11% CAGR over a 45 year period. I think that is a bit optimistic.

I believe in saving, but I also believe in realistic expectations.
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Old 04-03-2015, 03:12 PM
 
2,292 posts, read 1,558,471 times
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Quote:
Originally Posted by Petunia 100 View Post
I did, and you'd need to realize 11% CAGR over a 45 year period. I think that is a bit optimistic.

I believe in saving, but I also believe in realistic expectations.
The average return of the S&P from Jan. 1, 1975 until Dec. 31, 2014 (less than 40 years) is 13.64% including dividends.

So, apparently it isn't optimistic. I think the point is that dollar cost averaging into the S&P or Total Stock Market Index ETF or fund has a great probability of producing a large amount of money...say you start at 25 and quit at 65. And you don't have to contribute large amounts, you just have to start early and keep it going.
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Old 04-03-2015, 03:21 PM
 
8,820 posts, read 5,119,154 times
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Quote:
Originally Posted by Burkmere View Post
The average return of the S&P from Jan. 1, 1975 until Dec. 31, 2014 (less than 40 years) is 13.64% including dividends.

So, apparently it isn't optimistic. I think the point is that dollar cost averaging into the S&P or Total Stock Market Index ETF or fund has a great probability of producing a large amount of money...say you start at 25 and quit at 65. And you don't have to contribute large amounts, you just have to start early and keep it going.
A period including the greatest 18 year bull market ever, and not likely to be repeated. Also requiring 100% invested in stocks, which is far too volatile for most people to tolerate.

I agree that consistent saving is key.
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Old 04-03-2015, 03:39 PM
 
Location: Idaho
1,451 posts, read 1,152,796 times
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Quote:
Originally Posted by Burkmere View Post
The average return of the S&P from Jan. 1, 1975 until Dec. 31, 2014 (less than 40 years) is 13.64% including dividends.
Here is another set of stats for the 'average investor' who follows the standard financial advice of investing in a blend of equities and fixed-income funds & the conservative ones who have invested exclusively in just fixed-income funds

Why The Average Investor's Investment Return Is So Low - Forbes

Quote:
"According to the latest 2014 release of Dalbar’s Quantitative Analysis of Investor Behavior (QAIB), the average investor in a blend of equities and fixed-income mutual funds has garnered only a 2.6% net annualized rate of return for the 10-year time period ending Dec. 31, 2013.

The same average investor hasn’t fared any better over longer time frames. The 20-year annualized return comes in at 2.5%, while the 30-year annualized rate is just 1.9%. Wow!

The average investor exclusively investing in just fixed-income funds has had an even worse experience. The annualized return is 0.6% over 10 years, 0.7% over 20 years, and 0.7% over 30 years.

Just who is the “average investor?” The QAIB states the average investor refers to “the universe of all mutual fund investors whose actions and financial results are restated to represent a single investor.” This universe would include small and large investors as well as professionally advised and self-advised investors.
Don't forget the fact that a sizable number of people are too broke to invest

http://www.bankrate.com/finance/inve...to-invest.aspx

Quote:
Six out of 10 people do not own any mutual funds or exchange-traded funds, a recent survey commissioned by Bankrate has found. The reason? Nearly 70 percent of non-investors say they simply do not have the cash to put into the market.
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Old 04-03-2015, 03:46 PM
 
Location: Approximately 50 miles from Missoula MT/38 yrs full time after 4 yrs part time
2,294 posts, read 3,338,641 times
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Quote:
Originally Posted by snowtired14 View Post
Another part of the problem is that the average Joe doesn't understand the market, and therefore, makes costly mistakes which the lords of Wall Street are all too happy to accomodate. A properly managed portfolio needs constant rebalancing to insure good (not great) return during a bull market, and minimize losses when the bear rears it's ugly head. Unfortunately all too many people react to the market and make the mistake of selling low, then trying to buy back in on the bounce and prices escalating. I let someone who knows what they are doing take care of it for me, since my IRA is the primary source of my retirement income, I'm not messing around with it.
I take issue with the first sentence in the above quoted post, the rest of the post is pretty much correct IMHO.
We all have our opinions and I fully respect that......and I certainly am no expert in finance or "what route to follow in retirement" to obtain the greastest amount of retirement income............I simply know what has worked out well for me over the past many, many years and I continue "follow that plan".

Regarding the first sentence in the above quoted post:................................
Any body who "doesen't understand the market and invests in one or more types of 'investment instruments' and doesn't know "what these various instruments are all about".....has nobody to blame but himself, if he loses money. There are many, many books (by respected 'financial gurus') as well as other sources of printed financial 'advise' AND, in the last 20 years or so, unlimited sources of GOOD financial information are available on the INTERNET........Anybody with normal intelligence can educate themselves in regard to the basic (and advanced) principals of investing in the more common types of instruments:..i.e. Mutual Funds, Closed End Mutual Funds, Stocks, Bonds, EFT's, REIT's, etc,etc. All it takes is the desire and the drive to be able to achieve a higher return than say 1/2 of 1% return on sometype of a CD.

I started to educate myself in the investment portion of the field of finance approx 35 years ago, knowing that social security would not be enough to allow me (us) to live confortably in the 'retirement' years.

As I've grown older (and have continued to manage my investments), I have become "smarter if you will" and have managed to keep my "mistakes" to a minimum. My 'logic' has been rather than pay a "money manager" say, 2% annual fee on 250,000 as a hypothetical example, AND have NO guarantees that he will make me a decent return, I'd rather take my chances and be my own "money manager" and keep that $5000 fee invested every year!!.......With a HIGHLY diversified group of instruments and being a patient investor, I have yet to make any "mistakes" that cost me an amount equal to what the annual fee would have been. Again as a hypothetical example, that 5000 fee would have earned and annual 795 at the average annual total return rate (say for the last 7 years) of .159%......Thus, on every hypothetical 250,000, the annual return would be 39,750.

To my way of thinking Money Managers (CFP's etc) are in business for one primary reason--------to make money for themselves!!.....If in managing your account they make money for you that's great, if however, they lose money for you in a given year (or years), you still pay them the fee and have no recourse as related to the loss.

I'll stick with my way.
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Old 04-03-2015, 03:47 PM
 
2,292 posts, read 1,558,471 times
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Quote:
Originally Posted by Petunia 100 View Post
A period including the greatest 18 year bull market ever, and not likely to be repeated. Also requiring 100% invested in stocks, which is far too volatile for most people to tolerate.

I agree that consistent saving is key.
It also contained a decline in the S&P from 1500 plus down to 666. Yes, it's always different "this time."

We could go five more years with no gain or even a net loss and still be above 11.5%. The point is a 40 year investment of the S&P including dividends has a very high percent chance of performing at 11% or over. Even if it's 10%...big deal...

Last edited by Burkmere; 04-03-2015 at 03:59 PM..
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Old 04-03-2015, 04:09 PM
 
12,825 posts, read 20,126,238 times
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Quote:
Originally Posted by Montana Griz View Post
I'm saddened & disappointed that evidentally a great many people (in my age bracket/ 83 in less than 3 weeks) have found it extremely difficult to arrive at retirement age and don't have enough retirement income to live a comfortable life.

I worked my way through college, (father had passed away when I was age 13), I started working at part time jobs at age 12 (stocking shelves at grocery stores, cutting grass & other similiar part time jobs until age 16 when I got a "good-paying" summer job for the next three summers (working on an Asphalt Paving Crew at 2.95/hr--with lots of over-time). Worked summer vacations and 3 part-time jobs throughout the college years and got married to college sweetheart right after graduation, AND started my sales and marketing career in the Industrial Engineering and Construction Field ....SEVEN days after graduation.

I worked for 40 years, married for 51 years and we had one child--couldn't have any more due to a medical situation--wife had 8 miscarriages. We saved as much as we could, lived and SPENT within our means, drove used cars until our 20th yr of marriage, wife worked in the medical field for 13 years in the middle of our marriage years, and we started to invest any extra dollars in the market in 1975 and put the maximum in our 401K's every year from 1981 to 1993 when I retired. I have NO pension of any type, NO gov't or military income of any type-------just social security and the income from an IRA account and the brokerage account established in 1975.....I am a "self-educated-investor" and do my own management. Until the passing of my wife, we had 11 years of very comfortable retirement and traveled extensively and wanted for nothing. To this day, I live in the home I built 35 years ago in the state and area I wanted to retire in, and have had no mortage for these last 35 years.

How did I (we) do it?..................By hard work, planning, living within our means, not carring any debt, and utilizing "common sense" in all aspects of our married life...
Nothing any other couple couldn't do if they: planned, saved, exercised "self-discpline", common sense and not try and "keep up with the Jones".

IMHO, 75% of those people (in my age bracket) that do not have enough retirement income, have no one to blame except themselves........Their current situation is the combined effect of the choices they made over these past many years.

Yes, I'm a realist and firmly believe "what effort your put into your life, results in what you get out of it in the end"!!
What you wrote is true for your age bracket and a few younger ones. However, starting ~ with people born in '60 or '61, the macroeconomic environment made it much more challenging. Good paying middle income jobs became scarcer and scarcer, meanwhile, starting in the late 1970s real estate costs undertook a rise that even recent melt downs never put a major dent in. People who graduated from college prior to 1970 had it particularly good in terms of ability to steadily build a nest egg. 20 years from now elder poverty will be a major issue and only a percentage of those experiencing it will be able to blame spending too much during Middle Age or not working hard enough. No matter how hard someone works at a series of jobs they are overqualified for, they may never net enough income to build a sufficient nest egg.
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