Investing

How to get 4% -5% annual return for next 30 years?

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  • Feb 17th, 2019 4:40 pm
Newbie
Jun 18, 2015
83 posts
13 upvotes
Ottawa, ON

How to get 4% -5% annual return for next 30 years?

I am looking for an investment which I can get 4% - 5% return (or higher than GIC) every year for next 30 years.
The return can not be negative in every year.
It seems common stock is not suitable. I know in the long term, stock return is higher, but I already had them.
And I would not consider rental property, preferred shares.

Please help.
41 replies
Deal Addict
Sep 2, 2009
2978 posts
3020 upvotes
Ottawa
Nothing can offer that every year guaranteed. (My quick search to check my statement: "The short answer is nowhere")

...Until GICs offer a higher return than they currently do....and even then it could vary along the 30 years unless you get a 30-year term (I.e., new money would not be guaranteed to also get that return).
Deal Fanatic
Nov 9, 2013
5877 posts
7458 upvotes
Edmonton, AB
Honestly I think your expectations are unrealistic.

You have to either compromise on volatility or expected return.
Buy quality. Keep calm and go long (and note to self STOP SELLING).
Deal Fanatic
Jan 18, 2003
6482 posts
2388 upvotes
Mississauga
doesn't exist... if anyone says they can guarantee it, they are liars.
Jr. Member
Sep 16, 2013
159 posts
79 upvotes
Calgary, AB
Not going to happen with current rates the way they are. If GIC rates went up a bit you could probably get close to that 4% mark but that wouldn't be sustainable forever as rates can go up and down. A pretty conservative investment portfolio could easily return 5% per year but there is downside risk and, inevitably, you will have years where you might end up down 5%. Simply put, I think your expectations are unrealistic. There are definitely ways to average out at 5% per year for 30 years but not a guaranteed 5% per year. You need to ask why you are even so concerned about making 5% every single year for 30 years. Are you trying to live off interest or just afraid of seeing dips because you won't be able to sleep at night?
Sr. Member
Aug 22, 2012
835 posts
903 upvotes
Mark Town
US government EE bond is guaranteed to double in value within 20 years. Often it is less than 20 years.
Deal Addict
User avatar
Oct 14, 2015
2116 posts
2515 upvotes
Design a Permanent Portfolio.

Over a 30-year span, three to five years can be expected to have negative returns.

Deal Addict
User avatar
Aug 4, 2014
3963 posts
4723 upvotes
Toronto, ON
If you believe that BCE will be around in 20+ years, their Strip bonds maturing in 2040+ are yielding 5%+.

But can’t get more than 3% from more “guaranteed” government/provincial bonds. 30 year Ontario bond maturing in 2049 currently yields 2.94%. See
CUSIP: 68333ZAA5 on the last page there: https://www.questrade.com/docs/librarie ... s_list.pdf

So yeah, until the rates go up more - you’d have to decide what’s more important, more risk or less return..
Deal Addict
Jan 20, 2016
2028 posts
1013 upvotes
Houston, TX
freilona wrote: If you believe that BCE will be around in 20+ years, their Strip bonds maturing in 2040+ are yielding 5%+.

But can’t get more than 3% from more “guaranteed” government/provincial bonds. 30 year Ontario bond maturing in 2049 currently yields 2.94%. See
CUSIP: 68333ZAA5 on the last page there: https://www.questrade.com/docs/librarie ... s_list.pdf

So yeah, until the rates go up more - you’d have to decide what’s more important, more risk or less return..
In alternative to FI thread there was a link to (poweshare?) prefs yeilding 5.5% and ad they are floats? their price do NOT fluctuate so much as other prefs, eg they was not beaten so badly in 2015 etc.
Actually last 5y their price was quite stable
Quite good substitution for GIC*

* assuming OTHER risks beyond just price fluctuations...
Make the face great again
Member
Sep 9, 2012
372 posts
120 upvotes
TORONTO
dsren95 wrote: I am looking for an investment which I can get 4% - 5% return (or higher than GIC) every year for next 30 years.
The return can not be negative in every year.
It seems common stock is not suitable. I know in the long term, stock return is higher, but I already had them.
And I would not consider rental property, preferred shares.

Please help.
There is no such investment that will consistently, without fail, provide a stable return without any risk.

One potential way to explore to maximize your reward while keeping your risk minimal is to split your funds into 5 equal parts, then invest it five ways in a 1-year, 2-year, 3-year, 4-year, and a five year GIC. As a GIC matures roll it into a new 5-year GIC.
With this you'll give up liquidity and cash flow, but you'll be nearly maximizing the GIC rates you can get.
Deal Addict
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Aug 4, 2014
3963 posts
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Toronto, ON
@asa1973 , well OP said “And I would not consider rental property, preferred shares.”.. :)
Deal Addict
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Dec 24, 2007
1811 posts
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BC
dsren95 wrote: I am looking for an investment which I can get 4% - 5% return (or higher than GIC) every year for next 30 years.
Doesn't exist. In finance there's a concept called: "Risk and return". For higher returns you have to accept a certain level of risk. Risk doesn't mean just risk of loss - risk means a certain level of volatility - there will be periods of high returns and periods of low returns.

If you want a no or low risk security you have to accept lower returns - that is GIC or Government Treasury bill rates. There is no free lunch, otherwise everyone will flock to the security which then drives the price of that investment up, which lowers the rate of returns down. Anyone who tells you that they have a security that has no risk and high returns is a liar.
Sr. Member
Apr 9, 2012
583 posts
169 upvotes
Markham
Bernie Madoff offered a fund like that. Positive return every year and no negatives even in market downturns. You can look into that fund.
Deal Expert
User avatar
Apr 21, 2004
58648 posts
24637 upvotes
What about 10% every two years, is that more feasible? :)
Deal Fanatic
Feb 15, 2006
9183 posts
3861 upvotes
Toronto
dsren95 wrote: I am looking for an investment which I can get 4% - 5% return (or higher than GIC) every year for next 30 years.
The return can not be negative in every year.
It seems common stock is not suitable. I know in the long term, stock return is higher, but I already had them.
And I would not consider rental property, preferred shares.
Lots of option to get 4-5% average return over 30 years. But nothing that will provide no negative return in any year.

Adjust your requirement for something more realistic, then you might finding something.
Deal Addict
Jan 20, 2016
2028 posts
1013 upvotes
Houston, TX
freilona wrote: @asa1973 , well OP said “And I would not consider rental property, preferred shares.”.. :)

Ah, missed that, by my bet OP didn't realize there are many "flavors" of prefs, most common rate-reset every 5y and they price fluctuated so much then.
Many others (I'm not prefs expert, but they probably are "floats" and just track current "prime") do not have such big fluctuations so they didn't experienced negative returns in last 10 years imo (didn't check how they worked through 2007-2008 though)

In other case, OP been told already he actually wants GIC but with 4-5% rate :) Even bonds could become "negative" if rates will go up, eh?
If (and that quite big IF with recent development in BoC and Fed) prime will go to 4%+ territory he possibly cold get GIC or HISA 4%+ as well...

p.s. it was "perpetual" https://web.tmxmoney.com/quote.php?qm_symbol=PWF.PR.I
except some strange deep dive in end of 2008, they was around $25 quite all the time...
Make the face great again
Deal Addict
Sep 2, 2009
2978 posts
3020 upvotes
Ottawa
asa1973 wrote: except some strange deep dive in end of 2008, they was around $25 quite all the time...
Which means even that is not "guaranteed" - but good to know it's pretty stable.
Deal Addict
Jul 15, 2009
3647 posts
3043 upvotes
Rental property can go down. Bonds can go down.

Only GICs can't go down. But you won't get 4-5% with them.

Why do you need it to never go down? Do you plan to sell it all off every single year? If you don't sell, why do you care what it's worth at every point in time?
Sr. Member
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Sep 18, 2016
501 posts
489 upvotes
invest in porn or a bordello
"Do not allow yourself to become resentful, deceitful or arrogant"
Jordan B. Peterson
Deal Addict
Sep 2, 2009
2978 posts
3020 upvotes
Ottawa
1Ogiku2 wrote: invest in porn or a bordello
I hear those go down a lot too.

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