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Personal Finances / Buying or Selling a Home


Subject:  Re: Mortgage Date:  8/5/2019  2:37 PM
Author:  inparadise Number:  129227 of 129288

I'm curious - if you don't mind sharing - what sort of return-on-investment rate you expect for your nest egg accounts over the next several years?

I only ask because it seems typical that younger folks invest in riskier stuff, having a longer time frame in mind, and expecting 7% or 8% long term returns. But older, retired folks often lean more towards safer, income type investments that generally might expect to have lower returns, since they have a shorter time frame to consider and don't want to suffer down markets.

Would you still expect your investments to beat that mortgage rate?

I anticipate our investments will make 3.625% and then some. My I-bonds make more than that. But the anticipated return we used in looking at retiring was only 4%. If we earn 4% we will never touch principal. We retired in our 50's so our investment time frame is not a short one. We have a balanced stock and fund portfolio and with our future SS and pensions counting towards our "bond" allocation we are primarily investing in stocks, though some of those also give a very nice dividend, making them somewhat bond like. Even our current home, which we are putting into the rental market, should return over 6% fully managed and without annual appreciation, closer to 15% since I will manage and we anticipate a low ball for this area increase in value at a minimum 1.5%. (Great 10 year profit projection spreadsheet for long term rentals can be found here: go to 3rd download. It's honestly hard not to average at least 3.625% over time. Year to year is different, but over 30 years, hard not to.

I have tempered my risk tolerances to accommodate DH and our lack of jobs. What I do may certainly not be for everyone, but with our resources I feel confident it will work for us. Or as I told Eldest when he graduated college and landed a great paying job, we'll move in with him if we fall on tough times. (Kidding, really. Last thing I would do.) No doubt helps that we are not big spenders when it comes to depreciating assets.

Personally, I think most retirees are too conservative with their allocations. Then again Dad died at 87 still 100% invested in stocks, so my bias shows.

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