Quote:
Originally Posted by AU Doc
5% is the number that came to mind for me. Though it's likely because it's something I've read somewhere in the past. I doubt I'm clever enough to come up with that myself  It does make sense for the return to be at least high enough to account for inflation, which is less than 3% currently if my Google search is to be believed.
So all in you're looking for a return in the range of 7% to 14%. I guess the gold standard is to do better than the market, which will depend on the time frame you're looking at. I think historically that's going to be around 12%, or doubling your money about every 7 years. I could certainly live with that! |
I don't know that I ever held myself to any particular standard..... seriously. What I'm trying to do is to create enough cash flow to more than cover living expenses and taxes.... and not dip in to the capital.
Generally there is capital appreciation over time (time is variable) with "most" investments (NOT BONDS)... and that is gravy in my eyes.
For most people - they're not yet taking the dividend to live on - and that's where the growth really gets accelerated. Taking the cash - and the growth, combined - is where the magic can really start. At some point then - you're retired (I've been for 24 years or something like that) and want to live on the cash created - which is where the accumulated pile needs to be sufficient.
If you figure (as I do) to average 5% dividend - and factor a 20% tax rate - then you're net cash is about $40,000 PER MILLION. Scary when you think about it really..... that if you're earning $150K a year now - you'll need 3 million invested to replace that spending.
This is why -- when you come to retirement - you don't want 20 years left on your mortgage....