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Originally Posted by gearheads78
OK now I want to go back to the begining and read some of the links.
I have a question about this one
http://money.cnn.com/magazines/money...nds/index.html
It lists those funds YTD and 5 year. Does the 5yr mean average per year or total 5 year return? Some of those funds say 5years around 12-15% which seems like a lot but if thats total does that mean they are only averaging 2-3% at year?  |
Since 1962 the average return on big cap stock market is 9.62%…. thus the saying that you average 10% annual average returns in the stock market. But there's a CAVEAT! You can be UP 30% one year and down 40% the next year. This is why you can't put money in the market that you're planning on needing in the "short term". Because for certain - the market will be down when you absolutely must have the money. Long term - it's the best place in the world to be invested. But short term - you can get creamed.
If you're saving to buy a house… I would split my investments and savings putting perhaps 60% in the market -- and keeping 40% in liquid CD's or some other "certain" capital return. That way you could take advantage of POSSIBLY getting some growth in your capital - but you wouldn't have to depend on perfect returns when the time comes that you want to make your downpayment. You could end up with 100% of what you need just from the 60% you invested in the market -- but you could also come up short and either be forced to wait or forced to sell in a down market. Or you could use the 40% cash you saved and just figure out some other combination to make your down.