Comments on: Should We Expect Double Digit Returns?

By: Jack Miller

Jack Miller — Fri, 30 Dec 2005 21:31:06 +0000

I must be straight up with you. Many of the comments show a lack of confidence in the markets and in the investors ability. For example, it is not a good investment move to pay off a mortgage. This idea is for those who want to hunker down, live a modest life and avoid the work of investing. It reminds me of the fellow in the bible who hid his talents in the ground.

The after tax cost of a home mortgage for most folks is less than 4%. Stocks average better than 11% long term. Those who hide their money are giving away a fortune in order to feel good. Pooh on 6% diversified.

By: baselle

baselle — Tue, 27 Dec 2005 06:22:05 +0000

People have such short memories! 2000, 2001, 2002, and some of 2003 gave us negative returns. When I first started with this particular 403B in 2000, I distinctly remember that my contributions made up for the losses. My dollar holdings stayed steady while the price went down and the NAV went up. It was definitely a red-queen running in place feeling.

And it wasn’t that long ago.

6% – with enough diversification that something in your portfolio will be going up that you can watch and cheer, even if your core holding is flat or dropping.

By: All Things Financial

All Things Financial — Tue, 27 Dec 2005 05:35:35 +0000

The Carnival of Investing – Issue 2

Welcome to the second issue of the Carnival of Investing. There’s a lot of interesting stuff from a lot of different blogs so be prepared to spend some time here. I hope you enjoy.

Blog

Article Title

Blueprint for Financial Pro…

By: trip

trip — Tue, 27 Dec 2005 02:50:10 +0000

I do all of my planning with an 8% return (as does Jonathan Clements). Jeff Opdyke suggests planning for a 7% return. I like the higher 8% because if forces me to make sure my portfolio is working as hard as I can make it work. Fortunately it looks like I will almost double that this year! I am pleased but not complacent.

By: Karteek

Karteek — Sat, 24 Dec 2005 18:13:20 +0000

The Superman of the bond world, Bill Gross, wrote a book in 2000 called ‘Everything You’ve Heard About Investing Is Wrong’, where he argues (in the middle of soaring valuations) that a reasonable long-term return going forward is 6%. Seemed crazy at that time, but as we all saw, markets that exaggerate one way tend to correct themselves.

I agree with mbhunter that in such a situation, reducing debt leverage is great. Paying off your mortgage early is an assured return, even more rock solid than Treasuries if you will, although I’d probably not push all my non-retirement money towards this purpose. It’s incredible though how much just a couple hundred bucks a month can shrink your debt.

By: RS

RS — Fri, 23 Dec 2005 21:18:40 +0000

I don't count on double digit returns either. I used to since I had just finished college durig the tech boom and started investing then. I thought that I was going to be rolling in money. Let me tell you, that didn't turn out well. 1) I knew nothing about the stock market yet...just that everything seemed to be making money at the time. 2) Turns out that most of the stocks in my E*Trade account are pretty useless now. 3) Now I am an index fund investor and I do not expect 10+% returns each year (though it would be nice). I was wondering if the mbhunter would elaborate a little more on his comment about paying down the mortgage. I posted the following article on the Young Professionals Financial Blog about that exact question. I would love a few comments on what I should do in the coming year. Thanks.

By: mbhunter

mbhunter — Fri, 23 Dec 2005 05:05:25 +0000

I don’t count on double-digit returns. 10% is way too high to expect for this year. I think one of the best places for extra money above and beyond tax-advantaged retirement accounts is paying down a mortgage. Now, if interest rates hit 6-7% again, then start saving more there.