T.Rowe target Date fund 2030 has averaged roughly an 8.6% annualized return over its life of 11 years. Subtract out an average of 2.5% for inflation and you have a "real" return of 6.1%.
3% is pretty low. Some advisers are now using 4% to be conservative; citing "the new normal". But personally, I'm betting on the U.S. economy, and believe a very safe planning number is 5%.
You want a low cost way to invest $100K for a 15 year time horizon? Open an account with E*trade and buy $100K of TRRCX. No transaction fee and no commission, and TRRCX has a low expense ratio compared to peers. TRRCX is up 4.42% tear-to-date. Buy it and don't look at it again until next year (well OK - - you can look, but don't touch).
It's not sexy, exotic, or exciting, but it will do exactly what you are asking for: Well diversified, age appropriate asset allocation, professionally managed, automatically rebalanced, and low cost.
Just do it already. In the last four days since I've noticed you asking these questions TRRCX is up 1%. You'd have already been $1K richer if you'd bought TRRCX after the close last Thursday.
If it is pure stock fund in large companies, I would expect an average of 7 to 9 percent return a year and you need to subtract inflation from that number. So, we maybe looking at 5 to 7 percent after inflation. The best funds are those that are small. Smaller funds can invest in smaller companies , and if you google around, small companies have a much higher return than the Blue chip companies.
I want to invest $100k in a mix of solid low-cost mutual funds, good blue chip growth stocks, index funds, and ETFs for the long term (15 years) with mid to high risk. What annualized real return should I expect? By "real", I mean after taxes, fees, inflation, etc.
Would a 3% annualized real return be realistic for me?
