Hi Saul,
First up - thanks for this fantastic board and taking the time to share your investing experience and process. I was trying to understand when you decided to become a full time investor , whats the annual return you had to generate to cover your living expenses?
Please share if you can - many thanks!
I was trying to understand when you decided to become a full time investor
H thennaliraman, I talk about that in the Knowledgebase, Part 1, under Historical Results. As to your other question about annual return, it’s generally considered bad form to talk about personal dollar amounts on Motley Fool boards, but perhaps my description on the Knowledgebase will give you a general idea.
Best, and welcome to the board,
Saul
As to your other question about annual return, it’s generally considered bad form to talk about personal dollar amounts
I think he meant, when you retired what % did you need your portfolio to increase each year to pay your expenses without dipping into your principal? No need to mention a dollar amount.
I’d be curious too.
Bear
whats the annual return you had to generate to cover your living expenses?
Pension funds hire experts to tell them that. The 8 to 10 percent that was generally accepted 15 years ago proved to be to overly optimistic with the Fed’s ZIPT and NIRP policies – the Fed killed the savers. Another approach is to see what broad market indexes have returned over the years but taking into account the expected inflation.
Saul has said that you can do much better with smart stock picking and I agree but I would not use the higher return as my expected return. If you get it, fantastic! Give yourself a bonus! Play it safe.
Denny Schlesinger
I talk about that in the Knowledgebase, Part 1, under Historical Results
Saul says:
From 89 to 2007, $1 invested on 89 would be worth about $148 in 2007
1989 to 2015 inclusive, and that’s a lot of time for compounding to accumulate. As of the end of 2015, I had a 286-bagger on my entire portfolio.
That is amazing, stunning. I have no words to express my appreciation. I think you should not rely on Saul’s rate of return as a model for you. He achieved extraordinary success. I know for sure, I would have destroyed my capital many times.
1989 to 2015 inclusive, and that’s a lot of time for compounding to accumulate. As of the end of 2015, I had a 286-bagger on my entire portfolio.
That implies an annual compounded return exceeding 24% from 1989 to 2015. \
That’s beyond amazing… one way or another.
Thanks to everyone who chimed in. I was just looking for a percentage return and not dollar amount. Saul’s performance is phenomenal, I was trying to understand his expectation at the start as to what he thought was achievable.
I am certainly a long way away from living off of my investment returns, being conservative myself I would not to expect to do any better than average market returns.
Thanks again!
Being a retired person I am interested in this discussion.
However, I think the value of the portfolio is more relevant than the rate of return itself. To a person with a portfolio of, say, $2 million the rate of return is not as important as for one with half that amount. For all we know, the wealthier person may be investing to accumulate wealth for his heirs and for charitable giving, and can invest in purely growth stocks even taking some risks as he can afford to have an occasional lean year. A person of moderate wealth will be much more conservative as he depends on the return for his retirement living, whether it is in the form of dividends or capital appreciation.
Just my 2 cents.
Cheers.
alpha
I am certainly a long way away from living off of my investment returns, being conservative myself I would not to expect to do any better than average market returns.
Think positively and you will have a better chance to live off your investment returns going forward.
b&w
A person of moderate wealth will be much more conservative as he depends on the return for his retirement living, whether it is in the form of dividends or capital appreciation.
Actually I tend to differ on that point. If someone needs more income for their retirement living, they could have to be more aggressive to meet their goals or they might not eat 3 meals a day, seven days a week.
Sometimes paying rent on time-eating 3 meals a day regularly, wearing clothes without holes in them and driving a reliable car to get to work will require you to work 2 jobs to accomplish your needs. Sometimes you might have to work smarter, not harder. Same thing with investing
b&w