Comments on: Are Equities A Good Long Term Investment? http://www.moneysmartsblog.com/are-equities-a-good-long-term-investment/ Investing and Personal Finance Sat, 11 Feb 2012 17:11:02 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: Wiser Investor http://www.moneysmartsblog.com/are-equities-a-good-long-term-investment/comment-page-1/#comment-6585 Wiser Investor Thu, 19 Jun 2008 22:07:32 +0000 http://www.moneysmartsblog.com/are-equities-a-good-long-term-investment/#comment-6585 Bennett has been promoting his special brand of Financial planning for some time. I suggest before anyone use his 'planner' or follow his advice, they should do some due diligence. Google "Rob Bennett + Purcellville" or just go to these links: One of his sites: http://s162532268.onlinehome.us/Sewer/viewforum.php?f=1 A site that tracks and comments on his activities: http://www.s152957355.onlinehome.us/cgi-bin/yabb2/YaBB.pl Bennett has been promoting his special brand of Financial planning for some time.

I suggest before anyone use his ‘planner’ or follow his advice, they should do some due diligence.

Google “Rob Bennett + Purcellville” or just go to these links:

One of his sites:
http://s162532268.onlinehome.us/Sewer/viewforum.php?f=1

A site that tracks and comments on his activities:
http://www.s152957355.onlinehome.us/cgi-bin/yabb2/YaBB.pl

]]> By: Rob Bennett http://www.moneysmartsblog.com/are-equities-a-good-long-term-investment/comment-page-1/#comment-6275 Rob Bennett Sun, 01 Jun 2008 20:48:57 +0000 http://www.moneysmartsblog.com/are-equities-a-good-long-term-investment/#comment-6275 I am the co-developer of a calculator ("The Stock-Return Predictor") that aims to answer the question "how long is long-term?" We use a regression analysis of the historical stock-return data to determine how long it is likely to take for stock investors to realize that 7 percent return. The answer that we came up with is that it depends heavily on what the valuation level is at the time you buy the stocks. Buy stocks when prices are low, and you are likely to obtain a return of far more than 7 percent within 10 years. Buy when prices are moderate, and it probably will take about 10 years. Buy when prices are high (as they are today), and the odds are that it is going to take more than 30 years to see a 7 percent return. Rob I am the co-developer of a calculator (“The Stock-Return Predictor”) that aims to answer the question “how long is long-term?” We use a regression analysis of the historical stock-return data to determine how long it is likely to take for stock investors to realize that 7 percent return.

The answer that we came up with is that it depends heavily on what the valuation level is at the time you buy the stocks. Buy stocks when prices are low, and you are likely to obtain a return of far more than 7 percent within 10 years. Buy when prices are moderate, and it probably will take about 10 years. Buy when prices are high (as they are today), and the odds are that it is going to take more than 30 years to see a 7 percent return.

Rob

]]> By: Dorian Wales @ The Personal Financier http://www.moneysmartsblog.com/are-equities-a-good-long-term-investment/comment-page-1/#comment-6255 Dorian Wales @ The Personal Financier Sat, 31 May 2008 12:39:35 +0000 http://www.moneysmartsblog.com/are-equities-a-good-long-term-investment/#comment-6255 First of all thanks for the kind mentiond. Feedback is always energizing. I'd like to add something I view as very important (might answer Jordan's question or wonder). Keeping in mind we're investing for retirement and not for quick money is very important. Even though no one promises 10% a year we must keep in mind they way most of us save. The vast majority does so in timely contributions. I believe this is known as dollar cost averaging which literally constantly averages the rate at which we invest. This method dramatically lowers investment risk and, as I hope we've all learned and implemented, potential return. If you're saving for retirement timely contributions won't make you rich but they will decrease the risk of the investment significantly. First of all thanks for the kind mentiond. Feedback is always energizing.

I’d like to add something I view as very important (might answer Jordan’s question or wonder).

Keeping in mind we’re investing for retirement and not for quick money is very important. Even though no one promises 10% a year we must keep in mind they way most of us save.

The vast majority does so in timely contributions. I believe this is known as dollar cost averaging which literally constantly averages the rate at which we invest.

This method dramatically lowers investment risk and, as I hope we’ve all learned and implemented, potential return.

If you’re saving for retirement timely contributions won’t make you rich but they will decrease the risk of the investment significantly.

]]> By: Four Pillars http://www.moneysmartsblog.com/are-equities-a-good-long-term-investment/comment-page-1/#comment-6222 Four Pillars Fri, 30 May 2008 03:44:34 +0000 http://www.moneysmartsblog.com/are-equities-a-good-long-term-investment/#comment-6222 Guinness - "We're #1!, we're #1!" Ben - you are correct. Jordan - I don't have clue. Guinness – “We’re #1!, we’re #1!”

Ben – you are correct.

Jordan – I don’t have clue.

]]> By: Jordan Clark http://www.moneysmartsblog.com/are-equities-a-good-long-term-investment/comment-page-1/#comment-6215 Jordan Clark Thu, 29 May 2008 21:40:04 +0000 http://www.moneysmartsblog.com/are-equities-a-good-long-term-investment/#comment-6215 The question I keep asking myself is now a good time to start investing a good chunk of retirement funds into a diversified portfolio of index funds? I know you can't time the market, but I wonder if common sense isn't right to wait a bit when the general sentiment is the US & Canada are on the brink of a recession, and the IMF says there is a 1/4 chance of a world wide recession. Do you think returns would get close to the magic "10%" with an asset allocation with about 60% in the US & Canada if those countries under perform their previous 80 year history? The question I keep asking myself is now a good time to start investing a good chunk of retirement funds into a diversified portfolio of index funds? I know you can’t time the market, but I wonder if common sense isn’t right to wait a bit when the general sentiment is the US & Canada are on the brink of a recession, and the IMF says there is a 1/4 chance of a world wide recession.

Do you think returns would get close to the magic “10%” with an asset allocation with about 60% in the US & Canada if those countries under perform their previous 80 year history?

]]> By: Cash Instinct http://www.moneysmartsblog.com/are-equities-a-good-long-term-investment/comment-page-1/#comment-6212 Cash Instinct Thu, 29 May 2008 15:14:55 +0000 http://www.moneysmartsblog.com/are-equities-a-good-long-term-investment/#comment-6212 Cash under the mattress looks so easy to manage compared to choosing an asset allocation, deciding how much return you plan to get in the long run, whether the risk of equities is under or over estimated, etc... But you are sure to lose considering inflation with cash under the mattress, I know! ;) Cash under the mattress looks so easy to manage compared to choosing an asset allocation, deciding how much return you plan to get in the long run, whether the risk of equities is under or over estimated, etc…

But you are sure to lose considering inflation with cash under the mattress, I know! ;)

]]> By: Kyle http://www.moneysmartsblog.com/are-equities-a-good-long-term-investment/comment-page-1/#comment-6210 Kyle Thu, 29 May 2008 15:01:41 +0000 http://www.moneysmartsblog.com/are-equities-a-good-long-term-investment/#comment-6210 To me, the "long term" means 20 years at a minimum. Whether or not holding stocks for long periods of time is more risky or less risky depends on what you mean by "risky" to begin with. If you are talking about the possibility of suffering a nominal loss then yes, long-term investing is far less risky than short-term investing. But if you are talking about variability of results (i.e. how much money do I end up with after X years?) long-term investing is actually much riskier. The difference between earning 10% per year over 40 years and 8% per year over 40 years is huge. By that measure, long-term investing is riskier because short-term results are likely to have a much smaller standard deviation. So in that sense, investing because riskier the longer your time horizon. To me, the “long term” means 20 years at a minimum. Whether or not holding stocks for long periods of time is more risky or less risky depends on what you mean by “risky” to begin with. If you are talking about the possibility of suffering a nominal loss then yes, long-term investing is far less risky than short-term investing. But if you are talking about variability of results (i.e. how much money do I end up with after X years?) long-term investing is actually much riskier. The difference between earning 10% per year over 40 years and 8% per year over 40 years is huge. By that measure, long-term investing is riskier because short-term results are likely to have a much smaller standard deviation. So in that sense, investing because riskier the longer your time horizon.

]]> By: Mr. Cheap http://www.moneysmartsblog.com/are-equities-a-good-long-term-investment/comment-page-1/#comment-6209 Mr. Cheap Thu, 29 May 2008 14:56:20 +0000 http://www.moneysmartsblog.com/are-equities-a-good-long-term-investment/#comment-6209 I *believe* the reason people throw the 10 year time-frame around isn't because you can expect a 10% return, but rather that over a 10 year period you're very likely not to lose money (as BenE says). If you look at the WORST 1 year return in the stock market (looking at an index), it'd be pretty bad. If you look at the WORST 10 year period its going to be a lot better (see http://finance.yahoo.com/funds/understanding_investing/article/100545/Stock_Performance_by_Decade). If I'm understanding this chart correctly, in only two decades did investors have a nominal loss. I think if you expand it to 2 decades, there was never an overall loss. Of course, factor in inflation and its less of a rosy picture... I *believe* the reason people throw the 10 year time-frame around isn’t because you can expect a 10% return, but rather that over a 10 year period you’re very likely not to lose money (as BenE says). If you look at the WORST 1 year return in the stock market (looking at an index), it’d be pretty bad. If you look at the WORST 10 year period its going to be a lot better (see http://finance.yahoo.com/funds/understanding_investing/article/100545/Stock_Performance_by_Decade). If I’m understanding this chart correctly, in only two decades did investors have a nominal loss.

I think if you expand it to 2 decades, there was never an overall loss.

Of course, factor in inflation and its less of a rosy picture…

]]> By: BenE http://www.moneysmartsblog.com/are-equities-a-good-long-term-investment/comment-page-1/#comment-6208 BenE Thu, 29 May 2008 14:18:08 +0000 http://www.moneysmartsblog.com/are-equities-a-good-long-term-investment/#comment-6208 "This means that if you are investing for a 20 year time period and you are expecting a return of 7% then the odds of meeting or exceeding that return are higher than for a 10 year time period." This is not quite right. The odds of being over expectation remain the same. However, regardless of being over or under expectation, with time you are less likely to be far from the long term average. That is you are less likely to have very large gains or very large losses as the big movements have a tendency to cancel each other out during a long period. “This means that if you are investing for a 20 year time period and you are expecting a return of 7% then the odds of meeting or exceeding that return are higher than for a 10 year time period.”

This is not quite right. The odds of being over expectation remain the same. However, regardless of being over or under expectation, with time you are less likely to be far from the long term average. That is you are less likely to have very large gains or very large losses as the big movements have a tendency to cancel each other out during a long period.

]]> By: guinness416 http://www.moneysmartsblog.com/are-equities-a-good-long-term-investment/comment-page-1/#comment-6206 guinness416 Thu, 29 May 2008 11:39:02 +0000 http://www.moneysmartsblog.com/are-equities-a-good-long-term-investment/#comment-6206 Highest mutual fund fees! Highest cellphone bills! Highest airport charges! Wow Canada really is number one! That's all I got right now but I liked the post a lot, it's an explication of a comment I've seen you leave a few places, right? It never seems to go down to well, people like that 10% assumption. Highest mutual fund fees! Highest cellphone bills! Highest airport charges! Wow Canada really is number one!

That’s all I got right now but I liked the post a lot, it’s an explication of a comment I’ve seen you leave a few places, right? It never seems to go down to well, people like that 10% assumption.

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