Everything You Always Wanted to Know About Rate of Return

Compound Annual Growth Rate vs

I’ll be honest with you—writing this post makes me feel a bit like Jack Nicholson’s character in the movie “A Few Good Men”. Remember when Nicholson is being questioned by Tom Cruise in the most memorable scene from the movie and Cruise is demanding the truth? Nicholson replies, “You can’t handle the truth!” So, what …

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Think 8% Returns are Realistic? At Least One Robo-Advisor Disagrees


For years the investment industry—and various financial gurus—have told us that we can achieve an 8% (or better) return on our money by “investing in stocks.”

That statement is vague on the details so it’s difficult to determine exactly what it means, but the consensus on the inference is that investing in stocks (perhaps even a few bonds) brings with it at least an 8% return. Again, 8% when, where, and on what exactly remains a tad iffy, but silly details such as that need not keep you up at night.

So…what exactly should you anticipate as a return on your money?

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Is Indexed Universal Life Insurance Just what the Doctor Ordered?

Is Indexed Universal Life Insurance Just what the Doctor Ordered

Most of our readers and clients are familiar with the White Coat Investor—a web site started a few years ago by Jim Dahle, a physician who practices Emergency Medicine. I’ve talked about Jim’s work before, once quite a while ago when he attempted to malign whole life insurance and again about a year ago when readers wanted me to take on his suggestion that whole life insurance is not like a Roth IRA.

The second time I disappointed some people when I did the exact opposite of what they wanted by pointing out that he wasn’t wrong on that subject.

For the most part, we like to leave him alone in his pursuits. This is due in part to the fact that, believe it or not, we’re not all that different in our main goal—to identify and bring attention to the really dumb things financial professionals of all types do to people (for the White Coat Investor it’s specifically doctors) that leave them in a less than optimal position.

We differ, obviously, on our feelings about life insurance and that’s mostly fine. But Jim’s been on a bit of an indexed universal life insurance rant lately thus we’ve decided to weigh in on his recent work reviewing an indexed universal life insurance illustration that someone sent him.

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The Dow Jones Industrial Average: 8% per Year?

The Dow Jones Industrial Average

While there is no doubting the last couple of years have been really great years for the stock market (if you think of it in terms of the growth over the year, rather than growth from many years past), but we’d like to take a moment and think of things a tad longer term.

But keeping with our traditional habit of raining on parades, we wanted to take a moment to point out that not all that glitters is necessarily gold. We’ve talked before about where the Dow Jones Industrial Average would need to be in order to have achieved an 8% per year rate of return since 2000, and figured it was about time that we updated those numbers.

The answer:

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064 If You’re 20 You Need to Save Money, If You’re 40 You Need to Save a Lot O’Money

If Youre 40 You Need to Save a Lot O’Money

We are exhuming the body of the Retirement Income horse.  Yeah, we figured we haven't quite beaten this horse enough, so we're gonna dig him up and beat on him some more. This is all metaphor of course, we don't have any real hatred of horses or any other animals for that matter.

Recently, in my quest to bring our audience ever relevant information in our weekly podcast, I stumbled upon a Forbes article written by Rob Russell that cites a Morningstar report from earlier in 2013 that caught my eye.

The data from Morningstar suggests that the proverbial 4% withdrawal rate of your retirement portfolio, may not work so well after all.

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026 Now We All Know What Age Nearest Means

026 Now We All Know What Age Nearest Means

(Complete Show Notes Below)



In this 26th episode of the Financial Procast:

Estate Planning-It's Not Just for Rich People

When's the last time you reviewed your beneficiary designations on your life insurance policy(s), retirement accounts (IRA's, 401k's, etc.) and your will/trust/medical directives?  If you're anything like most of us, you’ve probably not re-visited your documents as recently as you should have.

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The Methodology Behind “Average” Rate of Return

The Methodology Behind Average Rate of Return

When someone quotes the rate of return on a specific investment or quotes average returns on an index to support a theory behind achieving similar results in their investment, do you actually know what exactly they are talking about?  Further more, what is the probability that you will in fact end up with what everyone else is quoting as “average?”  The old joking definition of Statistics is: generally everyone; specifically no one.  And this seems to be  pretty fitting for a novice skill level in probability and statistics.  However, once we get a little more technical, and employ a few more mathematical techniques, we start to explore what purpose these numbers really serve.  We'll explore some useful applications of these figures in this post.

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