What are your thoughts on realistic returns from the S&P 500?

[deleted1133766]

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I have always just played it safe and calculated all potential returns at 8%. Dave Ramsey seems to think 10-12% which is theoretically correct based on history but I don't believe he is telling the whole story with those numbers.

After inflation, fees, and taxes can you still be at 9% per year long term?

Or, can you explain to me what numbers are realistic and how you calculated them?

 

[Splenda88]

S&P 500 Average Return

See the historical performance of the S&P 500 Index. Learn more about the factors that affect the S&P 500 average return.

www.investopedia.com

 

[wook]

S&P 500 Average Return

See the historical performance of the S&P 500 Index. Learn more about the factors that affect the S&P 500 average return.

www.investopedia.com

Thanks for sharing. Interesting read.

 

[deleted1133766]

Some people say after all the fees, you end up with 6-7% while others say that you can still get 9-10%. You won't know until you are the one doing the investing but I wonder what most people's success has been.

 

[voxveritatisetlucis]

Historically it is about 10% but one should expect the worst when doing financial planning so I would say use 6 or 7 in your calculations and maybe be pleasantly surprised.

 

[wook]

The other thing that many people do is try to bail when things are at their lowest, and invest when things are going well (things are at their highest). Consistent measured investing tends to produce the best results.

 

[voxveritatisetlucis]

The other thing that many people do is try to bail when things are at their lowest, and invest when things are going well (things are at their highest). Consistent measured investing tends to produce the best results.

Exactly and most physicians should be able to do this with relative ease as they don’t have to worry too much about being let go or not having a paycheck during a recession. I can see why somebody in business or tech may be forced to draw down and not add during recessions if they get laid off

 

[deleted1133766]

The other thing that many people do is try to bail when things are at their lowest, and invest when things are going well (things are at their highest). Consistent measured investing tends to produce the best results.

Only smart people think for the long term.

Warren Buffet had said "If you are not thinking of owning a stock for 10 years, then don't even think about owning it for 10 minutes."

Even still, the difference between 8%, 9%, and 10% returns over the course of 30 years is mind boggling when you are dealing with even a few million dollars.

 

[Neopolymath]

I have always just played it safe and calculated all potential returns at 8%. Dave Ramsey seems to think 10-12% which is theoretically correct based on history but I don't believe he is telling the whole story with those numbers.

After inflation, fees, and taxes can you still be at 9% per year long term?

Or, can you explain to me what numbers are realistic and how you calculated them?

Unrelated but important, stop listening to basically anything Dave Ramsey has to say. If you are smart enough to do medicine you are smart enough to do better than him.

 

[deleted1133766]

Unrelated but important, stop listening to basically anything Dave Ramsey has to say. If you are smart enough to do medicine you are smart enough to do better than him.

I don't agree with everything he says but his advice on getting out of debt is pretty sound.

What don't you like about him?

 

[Neopolymath]

I don't agree with everything he says but his advice on getting out of debt is pretty sound.

What don't you like about him?

The dude is an unscrupulous shill who wants you to use actively managed funds but of course there is more about his character that I won't get into here. In general, his advice is for people with no self control and making 50k a year. It doesn't really fit our unique situation and career timeline. I could write a lengthy screed about this guy.

 

[voxveritatisetlucis]

He’s a tool imo

 

[deleted1133766]

The dude is an unscrupulous shill who wants you to use actively managed funds but of course there is more about his character that I won't get into here. In general, his advice is for people with no self control and making 50k a year. It doesn't really fit our unique situation and career timeline. I could write a lengthy screed about this guy.

Where do you suggest I get more appropriate financial advice about long-term investing into retirement?

 

[Neopolymath]

Where do you suggest I get more appropriate financial advice about long-term investing into retirement?

Bogleheads, mister money moustache, white coat investor, etc

 

[voxveritatisetlucis]

Where do you suggest I get more appropriate financial advice about long-term investing into retirement?

Zerohedge is actually pretty on point in regards to non-political, financial content. Most info free on Twitter. Keep in mind he/zerohedge tends to be bearish.

Are you an attending? If so might be worth getting yahoo finance plus. If not many research reports are available on Schwab

 

[deleted1133766]

Bogleheads, mister money moustache, white coat investor, etc

What kind of a return do you think someone should get if they are planning to park their money in the market for 25 years? Is there a way to get 10%?

 

[Neopolymath]

What kind of a return do you think someone should get if they are planning to park their money in the market for 25 years? Is there a way to get 10%?

Bro, no one has a crystal ball.

 

[deleted1133766]

Bro, no one has a crystal ball.

Most people say that if you invest for the long term that you should get 10-12%. Do you think that is accurate? That's what I'm trying to figure out.
The data says every 10 years, the returns are 10-11% but some people are saying to expect lower so I'm confused.

 

[voxveritatisetlucis]

You should always plan for lower returns and maybe be pleasantly surprised. Japan’s stock market crashed in the 90s and didn’t return to those levels for 30+ years

 

[deleted1133766]

You should always plan for lower returns and maybe be pleasantly surprised. Japan’s stock market crashed in the 90s and didn’t return to those levels for 30+ years

I would even be happy at 9%. I do all my calculations at 8% but everybody keeps telling me that 10% is not unrealistic. I don't even listen to Dave Ramsey's advice that you can get 12%.

 

[voxveritatisetlucis]

With all due respect, it appears you’re yield chasing. I know you quoted warren buffet above and even he would tell you that the primary goal of investing should be protection of principal rather than capital appreciation. Yield chasing leads to risky investment strategies like options and putting everything into a high alpha high beta fund like ARKK

 

[deleted1133766]

With all due respect, it appears you’re yield chasing. I know you quoted warren buffet above and even he would tell you that the primary goal of investing should be protection of principal rather than capital appreciation. Yield chasing leads to risky investment strategies like options and putting everything into a high alpha high beta fund like ARKK

Is it really "yield chasing" at 9%? I'm just looking for concrete historical trends.

To me, yield chasing is someone who wants 15%.

 

[Splenda88]

The dude is an unscrupulous shill who wants you to use actively managed funds but of course there is more about his character that I won't get into here. In general, his advice is for people with no self control and making 50k a year. It doesn't really fit our unique situation and career timeline. I could write a lengthy screed about this guy.

So that's more than half of the country. Over 50% US citizens can't save themselves from 1K of unexpected expense. It's always good to have no debt and live below your means.

 

[Neopolymath]

So that's more than half of the country. Over 50% US citizens can't save themselves from 1K of unexpected expense. It's always good to have no debt and live below your means.

It sure is. If only that's what he was saying and where he left it. It still doesn't excuse his grifting and it doesn't make it applicable to any physician once they graduate past figurative kindergarten of financial education.

The advice isn't really nuanced for our situation once you get past the obvious idea that you should probably save some money and not spend it all lol.

 

[deleted1133766]

It sure is. If only that's what he was saying and where he left it. It still doesn't excuse his grifting and it doesn't make it applicable to any physician once they graduate past figurative kindergarten of financial education.

The advice isn't really nuanced for our situation once you get past the obvious idea that you should probably save some money and not spend it all lol.

Off topic but not really off topic...What should a man do if he is dating a girl that has a Louis Vuitton bag? Is that a red flag that she does not understand what wealth is?

 

[Splenda88]

It sure is. If only that's what he was saying and where he left it. It still doesn't excuse his grifting and it doesn't make it applicable to any physician once they graduate past figurative kindergarten of financial education.

The advice isn't really nuanced for our situation once you get past the obvious idea that you should probably save some money and not spend it all lol.

I dont know too much about his grifting

The problem is many (?most) physicians [or people] can not control the behavioral aspect of finance... To be honest, I think that's all Dave is teaching.

Managing one's finance is not that complex unless one has multiple things going on...

 

[voxveritatisetlucis]

Off topic but not really off topic...What should a man do if he is dating a girl that has a Louis Vuitton bag? Is that a red flag that she does not understand what wealth is?

Louis Vuitton bags are pretty common and not really a sign of wealth. Most girls at my college had a few nice bags. The truly rich students had Hermes bags not LV or Coach

 

[deleted1133766]

Louis Vuitton bags are pretty common and not really a sign of wealth. Most girls at my college had a few nice bags. The truly rich students had Hermes bags not LV or Coach

What I was getting at is anybody who buys luxury items is most probably just rich and not wealthy. I was looking for some validation.

The truly wealthy cannot fathom spending money on such things.

Also, my understanding is LV marketing is to the middle and upper middle class. That is interesting.

 

[Neopolymath]

What I was getting at is anybody who buys luxury items is most probably just rich and not wealthy. I was looking for some validation.

The truly wealthy cannot fathom spending money on such things.

Also, my understanding is LV marketing is to the middle and upper middle class. That is interesting.

I can tell you this is false...

 

[Neopolymath]

Off topic but not really off topic...What should a man do if he is dating a girl that has a Louis Vuitton bag? Is that a red flag that she does not understand what wealth is?

What in the world?

I'm getting the sense you have read books about being wealthy but don't interact with anyone that is.

 

[voxveritatisetlucis]

I don’t know if it’s really related to that. Most of the girls I know who had Birkin bags were definitely wealthy (ie daughters of hedge fund managers or big CEOs). Some wealthy people just like nice bags/clothes though they do tend to be a bit more subtle (less obvious branding)

 

[deleted1133766]

What in the world?

I'm getting the sense you have read books about being wealthy but don't interact with anyone that is.

I get the sense you don't understand the difference.

 

[deleted1133766]

I don’t know if it’s really related to that. Most of the girls I know who had Birkin bags were definitely wealthy (ie daughters of hedge fund managers or big CEOs). Some wealthy people just like nice bags/clothes though they do tend to be a bit more subtle (less obvious branding)

How many women have you met that have Birkin bags anyway? My understanding is that you have to be put on a waiting list for that bag and have to have already spent some obscene amount of money at a Hermes store. I highly doubt most women spend like that.

Hence why I ask if you see some random girl with an LV bag, is that an indicator that she is essentially all flash no cash.

 

[voxveritatisetlucis]

At Yale a bunch of people had them. Maybe 15 or so. Not sure if they were handed down or new.

 

[deleted1133766]

At Yale a bunch of people had them. Maybe 15 or so. Not sure if they were handed down or new.

Do you feel that a bunch of people at Yale with Hermes bags is the proper sample size of individuals to have a discussion on how to generate wealth as it pertains to the larger population?

 

[Neopolymath]

I get the sense you don't understand the difference.

Simmer down. I'm not the one asking bizarre questions and acting like being wealthy involves being a weirdo who won't buy something as some form of financial stoicism. I can first hand verify that's something one would read in a self help book or something not real life. Restraint comes in many forms. I just find it strange you ask these questions and then intend to speak for affluent people when I say you are mislabeling a lot of people. They don't really go together.

But anyways, good luck with your personal finance journey. I hope you visit the resources I mentioned. They will be of value.

 

[deleted1133766]

Simmer down. I'm not the one asking bizarre questions and acting like being wealthy involves being a weirdo who won't buy something as some form of financial stoicism. I can first hand verify that's something one would read in a self help book or something not real life. Restraint comes in many forms. I just find it strange you ask these questions and then intend to speak for affluent people when I say you are mislabeling a lot of people. They don't really go together.

But anyways, good luck with your personal finance journey. I hope you visit the resources I mentioned. They will be of value.

You simmer down.

You obviously need to brush up on your reading if you can't understand the difference between rich vs. wealthy.

Read "The Millionaire Next Door" as baseline knowledge for your understanding of the subject and/or watch some videos from Warren Buffett himself.

Furthermore, wealthy people will not purchase those silly luxury items for thousands of dollars when they know that money is better "spent" somewhere where it can purchase an asset that will make more money.

Two types of people buy luxury items; the rich and the ultra wealthy. I do not believe physicians fall into the latter. I highly doubt you will find wealthy physicians with net worth's in excess of $5 million who have many of these material things. These types of physicians are probably rich but definitely not wealthy.

I will visit those resources you mentioned and you should visit the resources I mentioned.

 

[Neopolymath]

You simmer down.

You obviously need to brush up on your reading if you can't understand the difference between rich vs. wealthy.

Read "The Millionaire Next Door" as baseline knowledge for your understanding of the subject and/or watch some videos from Warren Buffett himself.

Furthermore, wealthy people will not purchase those silly luxury items for thousands of dollars when they know that money is better "spent" somewhere where it can purchase an asset that will make more money.

Two types of people buy luxury items; the rich and the ultra wealthy. I do not believe physicians fall into the latter. I highly doubt you will find wealthy physicians with net worth's in excess of $5 million who have many of these material things. These types of physicians are probably rich but definitely not wealthy.

I will visit those resources you mentioned and you should visit the resources I mentioned.

Lmfao. Ok dude you are cracking me up. You were probably in diapers when I read that book in the mid 90s. It was very popular. You can think what you want but you are wrong here. Take it from an "old person" with money and plenty of legitimately wealthy friends and family. This is going to shock you but they have nice things. Not everyone with generational wealth is a miser.

 

[voxveritatisetlucis]

You simmer down.

You obviously need to brush up on your reading if you can't understand the difference between rich vs. wealthy.

Read "The Millionaire Next Door" as baseline knowledge for your understanding of the subject and/or watch some videos from Warren Buffett himself.

Furthermore, wealthy people will not purchase those silly luxury items for thousands of dollars when they know that money is better "spent" somewhere where it can purchase an asset that will make more money.

Two types of people buy luxury items; the rich and the ultra wealthy. I do not believe physicians fall into the latter. I highly doubt you will find wealthy physicians with net worth's in excess of $5 million who have many of these material things. These types of physicians are probably rich but definitely not wealthy.

I will visit those resources you mentioned and you should visit the resources I mentioned.

Billionaire Chase Coleman Pays $56 Million for Two Point Dume Homes

Last summer, Charles Payson “Chase” Coleman III was jogging a victory lap of life. Bloomberg had just crowned the Tiger Global Management chief, 46, as the world’s top-earning hed…

www.dirt.com

This guy is definitely “old money” but spends on material things. I know what you’re saying but things in the real world don’t break into binary old vs. new money great gatsby type classes

 

[deleted1133766]

Lmfao. Ok dude you are cracking me up. You were probably in diapers when I read that book in the mid 90s. It was very popular. You can think what you want but you are wrong here. Take it from an "old person" with money and plenty of legitimately wealthy friends and family. This is going to shock you but they have nice things. Not everyone with generational wealth is a miser.

Yeah, we weren't talking about generational wealth. I was talking about GENERATING wealth.

You're all over the place. I know exactly what I'm talking about.

 

[deleted1133766]

Billionaire Chase Coleman Pays $56 Million for Two Point Dume Homes

Last summer, Charles Payson “Chase” Coleman III was jogging a victory lap of life. Bloomberg had just crowned the Tiger Global Management chief, 46, as the world’s top-earning hed…

www.dirt.com

I think it is safe to say that nobody perusing this website is going to become a billionaire. Most doctors won't even retire with $5 million. Let's be practical in our assessments.

 

[mvenus929]

What I was getting at is anybody who buys luxury items is most probably just rich and not wealthy. I was looking for some validation.

The truly wealthy cannot fathom spending money on such things.

Also, my understanding is LV marketing is to the middle and upper middle class. That is interesting.

I mean, I wouldn't go so far as to say the 'truly wealthy' wouldn't fathom such things. There are people who are very spendthrift in some aspects of their lives, but choose to splurge on a couple things because it brings them joy. For some, this means a nice car. For some, it means a nice handbag. The person buying it specifically to keep up with the Joneses may not even be rich.

 

[deleted1133766]

I mean, I wouldn't go so far as to say the 'truly wealthy' wouldn't fathom such things. There are people who are very spendthrift in some aspects of their lives, but choose to splurge on a couple things because it brings them joy. For some, this means a nice car. For some, it means a nice handbag. The person buying it specifically to keep up with the Joneses may not even be rich.

I think the other person was confused with the definitions of rich, wealthy, and ultra wealthy.

Rich people are basically money in and money out people. They are not wealthy because they spend too much. They are not in debt but they are also not millionaires either.

The wealthy want to see their money grow. They know that the ugly $3500 LV purse will do nothing to make their money grow and since they already have a lot of money, they don't need to buy the ugly bag, which is really just a status symbol, to prove anything. They might buy something more reasonable and use the $3500 to purchase some other asset that actually generates more wealth.

The ultra wealthy, and these are the top 1% will buy whatever they want because they can afford anything they want essentially. That's not a lot of people though. Mostly celebrities and people like Elon Musk.

It kinda makes sense when Dave Ramsey says that you have no business buying a new car unless you have $1 million in the bank. It sounds ridiculous but it actually makes sense.

 

[NITRAS]

Louis Vuitton bags are pretty common and not really a sign of wealth. Most girls at my college had a few nice bags. The truly rich students had Hermes bags not LV or Coach

We went to different colleges.

I rarely saw a LV purse in college. Maybe a coach purse. I have no idea what a Hermes bag is. . . .

 

[voxveritatisetlucis]

We went to different colleges.

I rarely saw a LV purse in college. Maybe a coach purse. I have no idea what a Hermes bag is. . . .

Haha I had no idea what it was before college. There’s a crazy amount of money in the Ivy League. You’ll meet students and then realize that you’re sitting in a building named after their grandfather or something

 

[Splenda88]

It kinda makes sense when Dave Ramsey says that you have no business buying a new car unless you have $1 million in the bank. It sounds ridiculous but it actually makes sense.

Dave gives sound advice...

I am sorry. I don't get why an upper middle class family of 4 with an household income of 200-250k/yr would need a house > 3000 sqft.

 

[deleted1133766]

We went to different colleges.

I rarely saw a LV purse in college. Maybe a coach purse. I have no idea what a Hermes bag is. . . .

The people who wear Hermes are the same people that like "artisanal cheeses."

 

[voxveritatisetlucis]

Dave gives sound advice...

I am sorry. I don't get why an upper middle class family of 4 with an household income of 200-250k/yr would need a house > 3000 sqft.

If one has a big family it’s probably necessary. I live alone in a 1300 square foot apartment and it’s too small for my liking. If I had a gf/wife living with me I would definitely move somewhere bigger and that’s not even mentioning kids

 

[deleted1133766]

Dave gives sound advice...

I am sorry. I don't get why an upper middle class family of 4 with an household income of 200-250k/yr would need a house > 3000 sqft.

This is true. Dave says people get into trouble with money because they have a spending problem.

As I am getting older, I actually want to own less things and instead spend money on experiences.

 

[Splenda88]

If one has a big family it’s probably necessary. I live alone in a 1300 square foot apartment and it’s too small for my liking. If I had a gf/wife living with me I would definitely move somewhere bigger and that’s not even mentioning kids

Our family of 4 live in a ~2000 sqft home under air (4BR/2BA)... Half of our kitchen cabinets are empty. 1 BR is also empty. I was saying the other day how would I furnish that place if it was 3000 sqft. Just furnish it with a bunch of things that I will probably never use.