Author Topic: Investment rate - dividend reinvestment question  (Read 554 times)

jason142

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Investment rate - dividend reinvestment question
« on: February 10, 2018, 03:17:06 PM »
Hi guys,

Any help here in very much appreciated. I'm trying to estimate a real and conservative return for my 401k investments (70% stocks / 20% bonds / 10% cash) over the next 20 year period. I understand i am asking a crystal ball question here but have to use something for the plan right. Anyway, I have read a lot of the opinions of the experts and i wanted to know whether the estimates provided by the Bogles of the world include dividend reinvestments? I presume their numbers do but as i've never heard any of them actually say as much i was wondering if this is the case? Also, as i've said above i'm interested in what guys would use as a real and conservative number for the following 20 year period. Thanks in advance for any help here.

Radagast

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Re: Investment rate - dividend reinvestment question
« Reply #1 on: February 10, 2018, 08:04:43 PM »
Yes they, include dividend reinvestment.

Over 20 years I would expect stocks to give about about 4% plus inflation, bonds about 0.5% plus inflation, cash -1% plus inflation. So that comes out to 2.8% plus inflation, which lets say is 2.2%. You should get about 5% nominal.

You'll tend to get more if you buy regularly, rebalance, select riskier definitions of stocks bonds and cash, or reduce or use more lucrative forms of "cash."
« Last Edit: February 10, 2018, 08:39:33 PM by Radagast »

SwordGuy

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Re: Investment rate - dividend reinvestment question
« Reply #2 on: February 10, 2018, 09:33:24 PM »
I thought the US historic average rate of return was 7% plus 3% average inflation, for a 10% total.

You just said 4% plus 3%, for 7% total.


Radagast

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Re: Investment rate - dividend reinvestment question
« Reply #3 on: February 10, 2018, 10:11:36 PM »
I thought the US historic average rate of return was 7% plus 3% average inflation, for a 10% total.

You just said 4% plus 3%, for 7% total.
you know... "conservative number"... yadda yadda... "valuations" ... yadda yadda.

https://dqydj.com/investments-and-returns/
It looks like the S&P500 has had real annualized returns of 4% or less after 20 years about 23% of the time. One time it didn't even beat a current EE savings bond (3.5% nominal)