In other post, I mentioned I was reviewing products like New Retirement. Unlike products like Empower, it request that you specify the return. I grab the expected return form a Vanguard paper on 2023 from one of the post, which are nominal returns.
Stock: 4.10% to 6.10%
Bonds: 3.6% to 4.6%
Inflation: 2.0% to 3.0%
If that is true then
70% stock/30% bond will return 3.95 to 5.65%
30% stock/70% bond will return 3.75 to 5.05%
This would mean there isn't going to be that much variation between 30/70 and 70/30. The recent publication predict even lower returns. If I use portfolio visualizer (I get the following (10th to 90th percentile)
Stock: 6.09% to 14.91%
Bond: 3.78% to 6.4%
I think these published projected return tend to be on the pessimistic side. In the most recent Four Pillars of Investing (2003) by Bill Berstein, he stated that the projected return were always wrong in a pessimistic manner. He listed projections from his various publications in real returns (as oppose to nominal ones from Vanguard). I think in the book he said that he was always wrong but may be getting closer to the real returns.
2000 Intelligent Asset Allocator: 2.7%
2002 Four Pillars of Investing: 3.4%
2010 The Investor Manifesto: 3.6%
2023: Four Pillars of Investing (2nd ed): 3.7%
So which number should I use? Right now, I feel that use the more pessimistic range, mostly because I am cautious. If I can make it on the pessimistic figures, I can make it if it turns out better.
Stock: 4.10% to 6.10%
Bonds: 3.6% to 4.6%
Inflation: 2.0% to 3.0%
If that is true then
70% stock/30% bond will return 3.95 to 5.65%
30% stock/70% bond will return 3.75 to 5.05%
This would mean there isn't going to be that much variation between 30/70 and 70/30. The recent publication predict even lower returns. If I use portfolio visualizer (I get the following (10th to 90th percentile)
Stock: 6.09% to 14.91%
Bond: 3.78% to 6.4%
I think these published projected return tend to be on the pessimistic side. In the most recent Four Pillars of Investing (2003) by Bill Berstein, he stated that the projected return were always wrong in a pessimistic manner. He listed projections from his various publications in real returns (as oppose to nominal ones from Vanguard). I think in the book he said that he was always wrong but may be getting closer to the real returns.
2000 Intelligent Asset Allocator: 2.7%
2002 Four Pillars of Investing: 3.4%
2010 The Investor Manifesto: 3.6%
2023: Four Pillars of Investing (2nd ed): 3.7%
So which number should I use? Right now, I feel that use the more pessimistic range, mostly because I am cautious. If I can make it on the pessimistic figures, I can make it if it turns out better.
Statistics: Posted by gavinsiu — Fri Jun 14, 2024 3:36 pm — Replies 10 — Views 521