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Wall St. Journal On Next 10 Years Rates of Return

 

NC Cpl
(@nc-cpl)
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From 12/16/21 article

Can the Stock Market’s Big Gains Continue in the Years Ahead? Unlikely.

"Our model suggests that forward-looking nominal annual returns for U.S. equities over the next 10 years are likely to be between 2% and 4%, with inflation predicted to come in at 1.5% to 2.5%. With valuations for non-U.S. equities lower than the U.S. market, we see more upside on international stocks in the years ahead. For fixed income, we expect future nominal annual returns over the coming decade to be in the 1% to 2% range. Given today’s persistent low-yield environment, it’s difficult to expect much more from bonds.

This topic was modified 1 month ago by NC Cpl

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Pizza Man
(@giovanelli766)
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Not sure what they mean by "valuations", that's a very nebulous term. A discussion of "stock valuations" can be found here: https://www.moneycrashers.com/stock-market-valuations/ I don't give much weight to anyone who claims they can see the future 10 years out. Vanguard made similar predictions (see one of my previous posts) in 2010 that did not pan out.

A more thorough look at global stock market valuations is discussed here: https://www.gurufocus.com/global-market-valuation.php Global stock markets certainly look better right now, however, a quote from the above link "Unlike the U.S. market, the histories of the data for other countries are not long enough to provide a more accurate projection of future returns." The above link shows the UK as very attractive looking now. A few years ago in the middle of Brexit, the UK was headed for the trash heap. That changed fast! The same things that can weaken the US economy can also affect world markets. Long term I am still for the total US market for investing my retirement funds 😏


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NC Cpl
(@nc-cpl)
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Topic starter  

I neither endorse nor refute this stuff. It is offered as just another source for those trying to determine how to configure PRC.


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Pizza Man
(@giovanelli766)
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I know, I was just throwing in my 2-cents 🙃 which is now worth 2.07 inflation adjusted cents.


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Bill Hines, Retirement Planner
(@hines202)
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Joined: 1 year ago
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"Unlike the U.S. market, the histories of the data for other countries are not long enough to provide a more accurate projection of future returns."

Huh? Are they talking about emerging markets or something? The US is a baby compared to many developed countries.

Anyway, as per the other thread on this topic, I've been seeing consistent advice like this going forward from the major brokerage analysts. They have the brainpower and data to back it up, and spend a lot of money developing that analysis. Is it enough for me to throw out my US investments and go all international? Heck no, and that's not what they say to do. They say that given this, a healthy allocation to ex-US developed markets should (emphasis) be a good bet. Honda, Toyota, Nestle, etc aren't bad companies to own in a total international stock market ETF.

And....as I speak I checked 🙂 For that precise moment, they are correct!

VXUS
Vanguard Total International Stock Index Fund ETF
$63.94
+$0.37
0.58%
VTI
Vanguard Total Stock Market Index Fund ETF
$242.66
+$1.22
0.51%
This post was modified 2 weeks ago by Bill Hines, Retirement Planner

Bill Hines
Investment Advisor/Financial Counselor/Retirement Planner
Emancipare Investment Advisors LLC
https://emancipare.com
bill@emancipare.com


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NC Cpl
(@nc-cpl)
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@hines202

Hey everyone, just a reminder that this section of the site is dedicated for citing sources of data one might (or might not, at their discretion) wish to incorporate into their model, and is not a forum for arguing the merits, accuracy or validity, or stating ones opinions of the sources. Just a "reference" section so to speak.


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Bill Hines, Retirement Planner
(@hines202)
Estimable Member Customer
Joined: 1 year ago
Posts: 101
 

@nc-cpl I didn't get that memo 🙂

Ok, one thing that fits this topic of 'sharing' inflation, etc info. When folks hire me to review their Pralana data with them, I frequently see very high inflation numbers for health care costs. Some don't realize this number is tacked onto the general rate of inflation in Pralana, some are just spooked by the overall rise lately. Here's some recent info on that topic:

Healthcare inflation has flattened over the last few years.

According to Fidelity, a 65-year old opposite-gender couple who retired in 2021 can expect to spend $300,000 in out-of-pocket medical expenses throughout retirement. (The estimate is $157,000 for women and $143,000 for men.) That is only a 1.7% jump from 2020.

Historic benchmarks:

  • The average medical cost inflation rate from 2010–2020 was 3.31%.
  • From 1935 through 2021, the average medical care inflation rate was 4.69% per year, significantly higher than the average general inflation rate over the same time span.

Bill Hines
Investment Advisor/Financial Counselor/Retirement Planner
Emancipare Investment Advisors LLC
https://emancipare.com
bill@emancipare.com


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