401K Speculation

upandcomer

Well-Known Member
Very optimistic of you assuming that you will earn 10.29% every year.

Long-Term NYSE and Dow Jones averages have met that benchmark. If you would have invested in the DJX at the beginning of 1975 when it was at 575 and today it is at 10,200.

That is an average rate of return of roughly 8.5%-8.6%. Of course we are in the middle of a Depression. If you take it from its high 13,900. Over the last 35 years we have averaged between 9.5%-9.6%. Or if you take the 32 year period between 75 and 07 we averaged 10.5% and the last 2.5 years have gone to hell.

This also shows the value of investing in "Blue Chip Growth Stocks" as opposed to small cap and mid cap stocks as your return on investment the last 35 years in the S&P 500 is not nearly as good.
 

upandcomer

Well-Known Member
P.S. This is all semantics anyways.

Even if it doubles 4 times in 35 years. He is still giving up over $80,000 in future earnings.
 

1989

Well-Known Member
Long-Term NYSE and Dow Jones averages have met that benchmark. If you would have invested in the DJX at the beginning of 1975 when it was at 575 and today it is at 10,200.

That is an average rate of return of roughly 8.5%-8.6%. Of course we are in the middle of a Depression. If you take it from its high 13,900. Over the last 35 years we have averaged between 9.5%-9.6%. Or if you take the 32 year period between 75 and 07 we averaged 10.5% and the last 2.5 years have gone to hell.


True but several factors have happen during those years that may not happen over the next 35 years. For example the 90's saw a 35+% return.

The 90's brought on rapid advances in technology along with the introduction of the dot-com era. As world markets opened up more and more companies were able to do business abroad. Which helped earnings growth.

Along with a greater percentage of people buying stocks. And people paying higher multiples for those stocks. Look at Amazon for example, there wern't many stock with 80 PE's back in 1975.

The dow did have a good overall century. It averaged a 5.3% return compounded annually for the 20th century.
 

upandcomer

Well-Known Member
True but several factors have happen during those years that may not happen over the next 35 years. For example the 90's saw a 35+% return.

The 90's brought on rapid advances in technology along with the introduction of the dot-com era. As world markets opened up more and more companies were able to do business abroad. Which helped earnings growth.

Along with a greater percentage of people buying stocks. And people paying higher multiples for those stocks. Look at Amazon for example, there wern't many stock with 80 PE's back in 1975.

The dow did have a good overall century. It averaged a 5.3% return compounded annually for the 20th century.

I can post to this more later but almost all people involved in stock market don't take a 100 year average, they take from the Depression on. The reason being our economy make up is totally different post New Deal then pre New Deal.
 
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