Annualized return on a 30-40 year 401k fund? (just take a guess...)

[brandon]

I'm trying to make some retirement plan calculations right now. My 401k is invested in a 2050 target fund.

What type of average return do you think we will see in the stock markets in the next 40 years, less inflation? I've been putting 6% in my calculator. Think this is high? low? Just take a guess.

in b4 -9000%

 

[Kludge]

8%


Pulled that out of my ass. ymmv.

 

[Original_Intent]

My guess is your only gain will be your employer's match. And as they say in Vegas, I wouldn't gamble anything you can't afford to lose - yes, I mean interest AND principle down the shitter. I am not saying that is what will happen or even that it is likely to happen, but is it in the cards? Emphatic yes!

Based on today's market valuations, I would say that 2% above inflation over the next 40 years is "pie-in-the-sky" optimistic. Legion laughs at this kind of post, mocking precious metal holders because it is not a growing investment, but only a store of value that doesn't grow.

I'm guessing in the decade that we are just starting (or going to start in a few months depending on where you draw the line) holding value is going to be a big win.

That's my 2 cents and probably not worth that. I am not a financial advisor and consider this the opinion of an average joe.

 

[brandon]

Thanks for the post OI. I'm certainly not optimistic about the country's economic future. But the way I see it is, there could be a complete economic collapse 20 years from now, and the after crash upside should more than make up for what I lost from my first 20 years of savings. I guess it all depends when the crash comes.

 

[Original_Intent]

Thanks for the post OI. I'm certainly not optimistic about the country's economic future. But the way I see it is, there could be a complete economic collapse 20 years from now, and the after crash upside should more than make up for what I lost from my first 20 years of savings. I guess it all depends when the crash comes.

My feeling is that even if that happens, stock price growth is going to be based on real things like Price to Earnings ratios,a nd non of this "Non GAAP profit" bullshit that we are shoveled on a quarterly basis.

I kills me that virtually all publicly traded companies can even get away with reporting numbers that they might as well put a huge flashing asterisk by and say "*Oh, by the way, we just LIED to you. The good news is that we are lying to you in approximately the same way that everyone else is lying to you. And if our numbers are any better than our competitors, it is more likely because our accountants are slightly more skilled at being creative and still coloring inside the lines than theirs are."

<IMHO>. /salute TruthWarrior

 

[Lovecraftian4Paul]

I would guess a couple percent. I think stocks will still continue to rise if you're in for a few decades--just as they have consistently for the last 200 years. But increased taxes and debt in the US is going to wreak economic hell, probably leading to negative returns or another "lost decade" like the one we just had with the big stock indexes.

Also, I expect we're looking at a period where less production and profit is the norm, barring some major political and economic changes. China, India, and East Asia are all on the up and up. They've got the phenomenal growth we once, and they can make the good returns too. Definitely invest a certain percentage of your portfolio in international stock.

 

[brandon]

I would guess a couple percent. I think stocks will still continue to rise if you're in for a few decades--just as they have consistently for the last 200 years. But increased taxes and debt in the US is going to wreak economic hell, probably leading to negative returns or another "lost decade" like the one we just had with the big stock indexes.

Also, I expect we're looking at a period where less production and profit is the norm, barring some major political and economic changes. China, India, and East Asia are all on the up and up. They've got the phenomenal growth we once, and they can make the good returns too. Definitely invest a certain percentage of your portfolio in international stock.

Thanks for the post. I'm currently in 23% foreign stocks. I have yet to micromanage my portfolio though. I'm just in a generic Fidelity 2050 fund.