7% to 9% a Year (on average) - Your Approach?

RolandFlagg

For the last decade or so putting money into a total world index fund was the easy option and with the power of compounding getting 10% a year or more was doable.

Going forward it seems like it will be a lot harder.

What would your approach be to try to earn 7% to 9% a year on average?

If:

1. You are not scared of  some volatility and know that some years you may lose money (on paper).

2. You will still have to take a bit of risk to get those rewards.

3. You are willing to leave your stake in to compound.

4. You don't need the money yearly (you don't need to be solely a dividend investor but if you are you let them accumluate)


So you are looking at passive index funds, some active, bonds, fixed rate savings, gold, and maybe a tiny amount in high risk/reward growth stocks or crypto.

So over if looking to invest for the next 15 years, not needing the money until the 15 years is up is passive indexing (or maybe just Berkshire stock) still the way to go,  or would you have to get more creative to get 9% as passive indexing going forward may only get you half those returns?

Thoughts?

jimjames

Why change? If you're happy with the investment then why not carry on as is? Returns might be lower (or might not) but trying to chase higher returns might be risky and in the end futile.

JohnWinder

8%/year arithmetic average, nominal, over then next 12 years for a passive global stock fund ought not be too fanciful.

MX5huggy

Sticking to Global Passive funds. Not looking to gamble on sectors or wizard fund managers. Choosing 10 funds or so to diversify seems mad plot overall performance and it will be close to Passive performance. 

george4064

My portfolio is broadly balanced between growth and value, so I'll be sticking to my original strategy.

[Deleted User]

RolandFlagg said:

Going forward it seems like it will be a lot harder.

Why do you think that? We are in a bear market and a recession is looming. When we come out the other side, we could be looking at another 10 years bull market like the last decade.

Albermarle

[Deleted User] said:

RolandFlagg said:

Going forward it seems like it will be a lot harder.

Why do you think that? We are in a bear market and a recession is looming. When we come out the other side, we could be looking at another 10 years bull market like the last decade.

Where is Thrugelmir when you need him, for an antidote to this unbridled optimism ?

Eyeful

Stick to a simple low cost passive World Index Tracker fund or ETF. 
I cannot foretell the future returns, they may be the same,lower or higher than they are now. 

Prism

Don't set yourself a target that you cannot control. What will be, will be. If its 9% then great - if its 0% over the next 10 years then simply accept it.

barnstar2077

Albermarle said:

[Deleted User] said:

RolandFlagg said:

Going forward it seems like it will be a lot harder.

Why do you think that? We are in a bear market and a recession is looming. When we come out the other side, we could be looking at another 10 years bull market like the last decade.

Where is Thrugelmir when you need him, for an antidote to this unbridled optimism ?

Indeed, so many have fallen to the ban hammer!  I miss Bowlheads three page responses, or even some of Fred's hilarious (if not always warranted) comments!

Albermarle

For the last decade or so putting money into a total world index fund was the easy option and with the power of compounding getting 10% a year or more was doable.Going forward it seems like it will be a lot harder.What would your approach be to try to earn 7% to 9% a year on average?

The 10% per year previously gained was also in an era of low inflation. So the real gains were also very good.

Going forward a 7% investments gain is possibly going to be a real gain of less than half of that.