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-   -   Silly question about theoretical return. (http://archives2.twoplustwo.com/showthread.php?t=407674)

12-30-2005 09:54 AM

Silly question about theoretical return.
 
I seem to always have this number bouncing through my head and I would like to either verify it, or debunk it for the sake of education. Forewarning: I'm Canadian, but this shouldn't matter too much. Anyhoo, here's my question:

Is it reasonable to be able to expect a return of 10% per annum on your investments?

Ideally, I would like to think that if I saved up $1 million from my bank-robbing business on the side that I would be able to retire on an income of about $100K/year. I understand that inflation would eat this right up, but that gets to a bit of a deeper problem that I'm not too concerned with at the time.

Any comments?

Pilket

12-30-2005 01:48 PM

Re: Silly question about theoretical return.
 
10% is about the average rate of return in the stock market year in and year out. depends on how you invest it. dont pick a crappy mutual fund.

Uglyowl 12-30-2005 05:52 PM

Re: Silly question about theoretical return.
 
[ QUOTE ]
I seem to always have this number bouncing through my head and I would like to either verify it, or debunk it for the sake of education. Forewarning: I'm Canadian, but this shouldn't matter too much. Anyhoo, here's my question:

Is it reasonable to be able to expect a return of 10% per annum on your investments?

Ideally, I would like to think that if I saved up $1 million from my bank-robbing business on the side that I would be able to retire on an income of about $100K/year. I understand that inflation would eat this right up, but that gets to a bit of a deeper problem that I'm not too concerned with at the time.

Any comments?

Pilket

[/ QUOTE ]

Using the stock market as an annuity vehicle is suicide! For example you start out with $1M and next year the market drops 20%. You are left with $700,000 after you take your retirement expenses.

The year after it drops another 20% and you now have $460,000 after two years.

This hypothetical is not out of the question. After that your 10% return per year (and $100,000 withdrawal) will further diminish your account.


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