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What is conservative estimation of investment returns?
Normally when you look at a portfolio; you guess how much return or gain you will see each year. Usually you would base this on each of the previous years' profits. When you make this guess, if you make it high then you might tend to plan on that high return and later be disappointed. If you make it low [or conservative] then there is less chance of disappointment.
A "conservative estimation of investment return" is a low guess of how much you expect to is in the next year.
From my investments I usually go with 8% to 10%, and I have never been disappointed.
What is conservative estimation of investment returns?
My rule of thumb is an after-inflation return of 3%. So if inflation is 3%, that gives you a nominal return of 6% per annum.
Some people use the risk-free rate Risk-free interest rate - Wikipedia, the free encyclopedia as their conservative benchmark. This is based on the yield on T-bills. This does not allow for inflation and is more risky in the long run, due to erosion of purchasing power. The only asset classes that have consistently beaten inflation are stocks and real estate. Commodities/gold match inflation, but they don't beat it.
This was in response to another poster, not a general statement.
I wasn't trying to be pious, but really, you have to do things in order to live below your means, and if that sounds pious, then so be it.
I agree with you about how to obtain a healthy living standard.....I also agree with you about helping others with our money. I am not saying that wise decisions are not necessary, in fact, the exact opposite.
Dawn
Quote:
Originally Posted by cpg35223
That's nice, but that's not really what the thread is about. We're really just discussing methods to obtain financial security, and really don't want some pious lecture about it.
I don't own a huge house, I don't drive a Mercedes, I don't take opulent vacations, and I don't light cigars with $100 bills. To be honest, money is not the driving motivation of my life, and I don't think it is for many others in this thread. If you read carefully, you'll find people who just steadily made intelligent decisions in their financial lives. To be honest, my main motivation in acquiring wealth is to retire early and devote myself to other, more deeply satisfying pursuits rather than earning a buck.
What's more, how is accruing wealth and contributing to the welfare of the world mutually exclusive? Why do you assume that we do not create more happiness in the world than we consume?
Being a "millionaire" , having a "millionaire-lifestyle" are dated concepts.
Maybe in the 50s 60s and even 70s it was a lot of money.
Having a net worth of a million dollars puts you squarely in the middle class in this country.
Let me elaborate further
Lets assume you own a house free and clear worth 500k today, you have about a quarter mil in investments over the years and you own a small business that needs a few 100k to run.
You are looking at a mil and change but dont buy that jet just yet.
According to me, a net worth of 5m and over will buy you a slightly better lifestyle and over 10m to be considered wealthy.
For more information on millionaires and billionaires please read "Richistan"
(sorry, it won't tell you how to make that money, just how to categorise and understand wealthy people)
Contrary to popular belief, accumulating wealth is a game of patience. 80% perspiration and 20% inspiration will follow.
Draw up a plan today.
If you have a job, unless you are in the corporate 6 figure payscale you pretty much have to save.
Dont blindly invest in stocks, you will lose, this is guaranteed.
There is no easy way, even if you are a financial genius.
If (and I stress on the word if) you have the right small business and have average management skills you can achieve a little.
I started out with a very small investment, my hard earned savings from my job, but researched to the bone and then built on it---
U have to have money to make it but once you have a good base it is possible for it to grow exponantially. I'm looking to buy another house soon and I'm leasing a farm and ranch that I will never sell. Save as much as possible and invest it wisely.
If you can get it started and keep it in the family you should be able to keep the chain of wealth going. Doesn't mean you have to live like a pauper either. I think buying a new car is just plain stupid. It's only new for 1 day then it's a used car.
Here is what Warren Buffet has to say about it, in yesterday's Parade Magazine. Same old boring stuff, but it works. 10 Ways to Get Rich | PARADE Magazine
Summary: 1. Reinvest your profits 2. Be willing to be different 3. Never suck your thumb (read the article for the explanation) 4. Spell out the deal before you start 5. Watch small expenses 6. Limit what you borrow 7. Be persistent 8. Know when to quit 9. Assess the risks 10. Know what success really means
Here is what he says about #10
Quote:
"Despite his wealth, Buffett does not measure success by dollars. In 2006, he pledged to give away almost his entire fortune to charities, primarily the Bill and Melinda Gates Foundation. He's adamant about not funding monuments to himself—no Warren Buffett buildings or halls. "I know people who have a lot of money," he says, "and they get testimonial dinners and hospital wings named after them. But the truth is that nobody in the world loves them. When you get to my age, you'll measure your success in life by how many of the people you want to have love you actually do love you. That's the ultimate test of how you've lived your life."
I worked hard all my life and have 5 kids. I have all of 80$ in the bank so all you millionaires can just ****. I made your money so can it.
My parents probably have a net worth of probably 600k or so...they got there by working in a factory and a bank with thier highschool educations, working 2nd jobs, not having fancy stuff or new cars, not spending lots of money in bars, gambling or on cigarettes. They lived cheaply and saved...my mom was one of 5 kids growing up and they were DIRT poor. My dad was one of 3 kids from a small farm.
When I was younger I worked bailing hay, detassling corn, mowing yards, I worked early mornings in bakeries, I spent my summers and even christmas breaks from college working 60+ hours a week in carwashes. I was a VERY good student and got a good job where I ALWAYS lived way below my income. To this day I clip coupons and wait for sales to buy things I need.
You sir, have made nothing for me.
5 kids are expensive even on a good income so if you chose to have 5 kids then be a man and don't cry that you don't have money. Hard work doesn't guarantee wealth.
Judging from your comments I suspect you have spent a small fortune on cigarettes, gambling, alchohol or a combination thereof.
My parents probably have a net worth of probably 600k or so...they got there by working in a factory and a bank with thier highschool educations, working 2nd jobs, not having fancy stuff or new cars, not spending lots of money in bars, gambling or on cigarettes. They lived cheaply and saved...my mom was one of 5 kids growing up and they were DIRT poor. My dad was one of 3 kids from a small farm.
When I was younger I worked bailing hay, detassling corn, mowing yards, I worked early mornings in bakeries, I spent my summers and even christmas breaks from college working 60+ hours a week in carwashes. I was a VERY good student and got a good job where I ALWAYS lived way below my income. To this day I clip coupons and wait for sales to buy things I need.
You sir, have made nothing for me.
5 kids are expensive even on a good income so if you chose to have 5 kids then be a man and don't cry that you don't have money. Hard work doesn't guarantee wealth.
Judging from your comments I suspect you have spent a small fortune on cigarettes, gambling, alchohol or a combination thereof.
I know that we can all play nicely and be friends
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