Investing

Has Anybody on This Forum Achieved 8-12% Consistently over a 10+ Year Period?

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  • Jan 15th, 2018 11:56 pm
[OP]
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Nov 24, 2016
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Has Anybody on This Forum Achieved 8-12% Consistently over a 10+ Year Period?

Basically I want to read some success stories. In a few months I'm selling my condo and investing the proceeds. However, before I concede to either a couch potato strategy or a cheap balanced fund (for example MAW104), I want to see if it's possible to have a higher growth rate CONSISTENTLY. My problem isn't taking risks. I'm 29 and I've got a long time to go. The problem is no matter what fund I look at, the 10 year average is not much different than a balanced fund. So what's the point of all the up and down with a risky fund!? None that I can see so far.

I'm sure a lot of people are buying and selling individual stocks and achieving success, but long-term success? That's what I'm trying to figure out.
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Feb 5, 2017
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to become rich you need money. how much do you think are you going to have to invest and how much are you going to add every year ?
This is the ultimate factor in reaching new levels of wealth.
[OP]
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Nov 24, 2016
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alexcalvado wrote: to become rich you need money. how much do you think are you going to have to invest and how much are you going to add every year ?
This is the ultimate factor in reaching new levels of wealth.
When I wrote "long-term success" I didn't mean becoming rich. I meant it in the context of the question: i.e. 8-12% a year. But obviously those two things are related.

Yes, regular contributions, low fees and sticking to a strategy are the most important factors in long-term success, but I'd like to hear from people who are achieving an above average growth, consistently.

I'm investing at least 200k, before September (the rest of the proceeds will go towards paying off debt etc...). I won't contribute anything for at least 3 years (until 2021), because I'll spend most of that time in school full time. Starting in 2021 (age 33) I will begin contributing every month. Even at 7%, compounded annually for 30 years, the future value is substantial enough that I'll be comfortable in retirement. But it never hurts to chase more gains (if it's a possibility).
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Aug 2, 2001
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Using Mawer as your sample, when I look at their returns the equity funds definitely out perform the balanced funds:
http://www.mawer.com/our-funds/performance/

Take a look at the last 5 year returns - these are during great market conditions so they really illustrate the point. The equity fund returns from Mawer are far superior to their balanced funds. The 10 year returns are a little harder because a couple of their funds have not been around that long, so it's tough to see a more long term comparison.


I'm not sure what exactly you're looking for - an awesome equity fund will not necessarily mean it has double the returns over the long term. I'm not a financial advisor, so this is purely opinion, but if you're looking for a quality equity fund the difference between it and a quality balanced fund may only be 2-4% over the long term. The difference is that 2% a year on $200,000 is $4,000 - which is still a lot of money, especially compounded.
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Feb 15, 2006
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8-12% Consistently over a 10+ Year Period? Not in legal investment.

There will be up and down. Some years you get more, some years you get less or even negative.

If you find something that gives 8-12% Consistently over a 10+ Year Period, you'll be better than everyone here. Better than anyone in the investment world.
[OP]
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TrevorK wrote: Using Mawer as your sample, when I look at their returns the equity funds definitely out perform the balanced funds:
http://www.mawer.com/our-funds/performance/

Take a look at the last 5 year returns - these are during great market conditions so they really illustrate the point. The equity fund returns from Mawer are far superior to their balanced funds. The 10 year returns are a little harder because a couple of their funds have not been around that long, so it's tough to see a more long term comparison.


I'm not sure what exactly you're looking for - an awesome equity fund will not necessarily mean it has double the returns over the long term. I'm not a financial advisor, so this is purely opinion, but if you're looking for a quality equity fund the difference between it and a quality balanced fund may only be 2-4% over the long term. The difference is that 2% a year on $200,000 is $4,000 - which is still a lot of money, especially compounded.
Well, as you said, the global equity fund isn't old enough. The 11-12% return is meaningless. Had it experienced the 2008 financial crisis, the fund's long-term average would have been lower. The US equity fund is pretty decent at 9.5%, I agree.

Going with a 100% S&P500 portfolio, whether through an ETF or a MF is certainly a possibility, but the issue I see with this strategy is the inevitable crash that's never too far off. In theory I can sit here and say "I won't take my money out of the market in a crash and I won't realize my losses," but that's just talk. Losing half of your assets in a 2008 like episode seems insane to me, even though I understand the concept of dollar cost averaging etc...

Every week I come up with a strategy that makes sense to me, but soon after I start poking holes in it and it all falls apart in my head. I guess what I need is a "role model." Someone that can come here and say I've done it and it's possible.

In terms of risk, I can definitely accept a 100% equity model, at least in theory. But I'm not sure how doable it is (for example what percentage of people sold their 100% equity ETF's and mutual funds when 2008 happened). You have to be a cool mofo not to exit the market when you're losing tens of thousands of dollars a week.
[OP]
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Nov 24, 2016
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Arrgh wrote: 8-12% Consistently over a 10+ Year Period? Not in legal investment.

There will be up and down. Some years you get more, some years you get less or even negative.

If you find something that gives 8-12% Consistently over a 10+ Year Period, you'll be better than everyone here. Better than anyone in the investment world.
I see. Well, I was starting to realize this before I made the thread. Just wanted to make sure I was along the right path.

Are you using nominal rates or real? The fund below (MAW 108) has grown at 9% a year (nominal of course).
http://www.mawer.com/assets/Fund-Facts/ ... ries-A.pdf

Hasn't the S&P500 grown at over 9% a year since the 1920's? Nominally speaking.
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MashGhasem wrote: Basically I want to read some success stories. In a few months I'm selling my condo and investing the proceeds. However, before I concede to either a couch potato strategy or a cheap balanced fund (for example MAW104), I want to see if it's possible to have a higher growth rate CONSISTENTLY. My problem isn't taking risks. I'm 29 and I've got a long time to go. The problem is no matter what fund I look at, the 10 year average is not much different than a balanced fund. So what's the point of all the up and down with a risky fund!? None that I can see so far.

I'm sure a lot of people are buying and selling individual stocks and achieving success, but long-term success? That's what I'm trying to figure out.
There are a few folks here in RFD that have a long term record of decent returns. Speaking for myself, I have been investing since 1998 and trading since 2005, and my CAGR is about 16%, using a combination of investing for the long term via dividend growth (I created a thread in RFD about my approach to this strategy) and short term investing / trading using several mechanisms which includes leveraging through options and Futures, besides trading stocks through a mechanical method that I found easier to remain consistent and keep temperament in check.

In my opinion, the long term success is possible as long as one can maintain discipline and temperament. That means not being greedy on a extreme bull market (like now) and not being fearful during crashes (which are always temporary). One needs to have a well defined plan tailored to their goals and risk tolerance. Part of the decent returns that I have is also tied to the higher risk that I'm taking being 100% allocated to equities (and recently crypto too), instead of having a portion of my money into cash or bonds. My portfolio obviously didn't look pretty in 2001 or 2008, but since I didn't sell my holdings, these were just paper losses. Short term investing / trading helped to curb some of those paper losses. I believe that a mix of boring, slow, steady long term investing like dividend growth, associated with some growth investing and trading different asset classes based on different strategies provide a great comprehensive portfolio.

The other component that helps to do better than the market is that choosing individual stocks allows me to address some of the disadvantages of buying the whole market (indexing): I can choose the quality of companies in my portfolio (where when I buy the index I must buy everything, the good and the bad); I can choose valuation and only buy a company when I consider it attractively priced (while indexing forces you to pay market price for everything); and I get to keep the money that I would have to spend in MER (those fees compound overtime and really add up). Obviously there are downsides to this approach, like having to spend more time and effort, without guarantees that it will always be superior. But in the long term, these strategies combined had served me well, and I firmly believe that anyone can learn and implement (my background is not in finance, it's in IT).

In the end I think it's important to gauge what is your highest priority. I enjoy the process of evaluating companies and writing automation for my trading models, but this is not for everyone, the same way that indexing is not necessarily the best answer to everyone. Read as much as possible, so you can make an informed decision to which strategy fits you better.


Rod
Build a comprehensive portfolio based on Investing and Trading strategies. Check out these threads and join the discussion:

Investing strategy based on dividend growth

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I helped someone put $75,000 into an account with 6 ETFs in late 2007. With periodic rebalancing. 55% allocation to Canada, the rest USA and non-USA foreign.

The account is now worth $200,000.

That's what, 10.3%/annum?

The bonus -- other than the US stock component (which is at all time highs, and is being algorithmically sold off), most of the components are only starting to move up from their 2008 levels, such as VWO, XIU, VGK (70%+ of the portfolio!).
Last edited by burnt69 on Jan 15th, 2018 12:32 am, edited 1 time in total.
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Feb 15, 2006
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MashGhasem wrote: I see. Well, I was starting to realize this before I made the thread. Just wanted to make sure I was along the right path.

Are you using nominal rates or real? The fund below (MAW 108) has grown at 9% a year (nominal of course).
http://www.mawer.com/assets/Fund-Facts/ ... ries-A.pdf

Hasn't the S&P500 grown at over 9% a year since the 1920's? Nominally speaking.
Your key word is "consistently". Nothing gives that. There'll be some years it won't have that type of return, and even negative.
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Dec 11, 2007
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As others have mentioned, "consistently" achieving 8-12% returns over long periods is unlikely, and anyone suggesting that is likely lying, running a ponzi scheme, and trying to scam you.

8-12% compounded annual growth rates over long period of time, however, is very doable, and perhaps this is what you really wanted to ask about anyway?

"The compound annual growth rate isn't a true return rate, but rather a representational figure. It is essentially a number that describes the rate at which an investment would have grown if it had grown at a steady rate, which virtually never happens in reality. You can think of CAGR as a way to smooth out an investment’s returns so that they may be more easily understood."
[OP]
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Nov 24, 2016
472 posts
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rodbarc wrote:
There are a few folks here in RFD that have a long term record of decent returns. Speaking for myself, I have been investing since 1998 and trading since 2005, and my CAGR is about 16%, using a combination of investing for the long term via dividend growth (I created a thread in RFD about my approach to this strategy) and short term investing / trading using several mechanisms which includes leveraging through options and Futures, besides trading stocks through a mechanical method that I found easier to remain consistent and keep temperament in check.

In my opinion, the long term success is possible as long as one can maintain discipline and temperament. That means not being greedy on a extreme bull market (like now) and not being fearful during crashes (which are always temporary). One needs to have a well defined plan tailored to their goals and risk tolerance. Part of the decent returns that I have is also tied to the higher risk that I'm taking being 100% allocated to equities (and recently crypto too), instead of having a portion of my money into cash or bonds. My portfolio obviously didn't look pretty in 2001 or 2008, but since I didn't sell my holdings, these were just paper losses. Short term investing / trading helped to curb some of those paper losses. I believe that a mix of boring, slow, steady long term investing like dividend growth, associated with some growth investing and trading different asset classes based on different strategies provide a great comprehensive portfolio.

The other component that helps to do better than the market is that choosing individual stocks allows me to address some of the disadvantages of buying the whole market (indexing): I can choose the quality of companies in my portfolio (where when I buy the index I must buy everything, the good and the bad); I can choose valuation and only buy a company when I consider it attractively priced (while indexing forces you to pay market price for everything); and I get to keep the money that I would have to spend in MER (those fees compound overtime and really add up). Obviously there are downsides to this approach, like having to spend more time and effort, without guarantees that it will always be superior. But in the long term, these strategies combined had served me well, and I firmly believe that anyone can learn and implement (my background is not in finance, it's in IT).

In the end I think it's important to gauge what is your highest priority. I enjoy the process of evaluating companies and writing automation for my trading models, but this is not for everyone, the same way that indexing is not necessarily the best answer to everyone. Read as much as possible, so you can make an informed decision to which strategy fits you better.


Rod
burnt69 wrote: I helped someone put $75,000 into an account with 6 ETFs in late 2007. With periodic rebalancing. 55% allocation to Canada, the rest USA and non-USA foreign.

The account is now worth $200,000.

That's what, 10.3%/annum?

The bonus -- other than the US stock component (which is at all time highs, and is being algorithmically sold off), most of the components are only starting to move up from their 2008 levels, such as VWO, XIU, VGK (70%+ of the portfolio!).
Thanks for sharing your stories.

@rodbarc

Could you please write a little about your experience in 2008? Basically what your portfolio went through and how you controlled yourself emotionally. Was it easy to not touch things, or did you have to convince yourself all over again? Basically refer back to long-term charts etc... I still remember it like it was yesterday. I was a recent high school grad with no care in the world, but watching it on TV was something else. Can't imagine what I would have done if I had my life savings in the mix.
Arrgh wrote:
Your key word is "consistently". Nothing gives that. There'll be some years it won't have that type of return, and even negative.
Cerenity wrote: As others have mentioned, "consistently" achieving 8-12% returns over long periods is unlikely, and anyone suggesting that is likely lying, running a ponzi scheme, and trying to scam you.

8-12% compounded annual growth rates over long period of time, however, is very doable, and perhaps this is what you really wanted to ask about anyway?

"The compound annual growth rate isn't a true return rate, but rather a representational figure. It is essentially a number that describes the rate at which an investment would have grown if it had grown at a steady rate, which virtually never happens in reality. You can think of CAGR as a way to smooth out an investment’s returns so that they may be more easily understood."
Cerenity, you're right. That's actually what I meant in my head. Thanks for adding CAGR to my dictionary.

I chose the wrong word. Arrgh, sorry for the confusion. As you said, nothing gives consistent growth.

I'm looking at MAW150 right now and tbh I'm liking it so far. The annual compound return over the past 10 years is 13%!!! That's crazy. For a long time I thought I was settled on the couch potato strategy, but I don't think it makes sense to not aim for higher returns when you can in your younger years. I certainly wouldn't touch this fund in my 50's, but at 29, why not!? Hold on to it for a decade and see where it takes me.
http://www.mawer.com/assets/Fund-Facts/ ... ries-A.pdf
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I'd say on an average it is quite possible with relatively limited risk. For example, Sask Pension which is a balanced fund, has averaged just over 8% annually for 31 years.
https://www.saskpension.com/investments.php

And this you have to consider the fact that it is 40% fixed income and relatively higher cost than couch potato, and relatively conservative portfolio.
MashGhasem wrote: I'm looking at MAW150 right now and tbh I'm liking it so far. The annual compound return over the past 10 years is 13%!!! That's crazy. For a long time I thought I was settled on the couch potato strategy, but I don't think it makes sense to not aim for higher returns when you can in your younger years. I certainly wouldn't touch this fund in my 50's, but at 29, why not!? Hold on to it for a decade and see where it takes me.
http://www.mawer.com/assets/Fund-Facts/ ... ries-A.pdf
You can't think of investments as a stop and go kind of thing. We have come off one of the largest bull markets on record. Yes, this fund has done well in the last 10 years, but you also have to think of it a bit differently. This fund started in 2007 just around the time of the mortgage crisis. As you can see in 2008, you see a huge 30% drop in value. When you have crisis, you then have new companies starting up or sold down opportunities to at which point the fund should take advantage, hence why this fund has done very well. We cannot say whether these returns will continue to occur.

This fund is decent, but just make sure you are prepared to sit out well longer or any future drops. Ensure your own financial needs are met and you are diversified in other areas.
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Sask Pension Plan Upto $6600/yr in Credit Card spending on RRSP contributions
http://forums.redflagdeals.com/sask-pen ... ns-2167222
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Dec 22, 2017
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burnt69 wrote: I helped someone put $75,000 into an account with 6 ETFs in late 2007. With periodic rebalancing. 55% allocation to Canada, the rest USA and non-USA foreign.

The account is now worth $200,000.

That's what, 10.3%/annum?

The bonus -- other than the US stock component (which is at all time highs, and is being algorithmically sold off), most of the components are only starting to move up from their 2008 levels, such as VWO, XIU, VGK (70%+ of the portfolio!).
That's pretty much anybody's returns due to the extended bull market we've had though

Last year alone I had 35% return from just buying blue chips and the huge returns in previous years make my average 10 yr return stupid high

The nearly decade long bull market just distorts returns in that pretty much anybody picking anything average high crazy returns and is not a good barometer for strategy or choices imo
Deal Fanatic
May 31, 2007
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Try to think of cycles in the stock market. The last 10 years has been a very good cycle. 10 years before, not really.

However with a balanced, low cost portfolio you should achieve 6-7% annual over the long term.
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Dec 27, 2006
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Look at any Andex chart - longer term 8% is easily achieved if you just buy the major index’s and add in a little small cap. It’s also worth noting that the most recent 10 yr number - only the SP500 has achieved the longterm average (20 / 30yr) number. Because of this I think we have more upside to bull - markets tend to overshoot on the upside before crashing when the reverts them back to the mean...imo.

http://tradex.ca/en/files/2014/07/Andex-Chart-2016.pdf
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MashGhasem wrote: Basically I want to read some success stories. In a few months I'm selling my condo and investing the proceeds. However, before I concede to either a couch potato strategy or a cheap balanced fund (for example MAW104), I want to see if it's possible to have a higher growth rate CONSISTENTLY. My problem isn't taking risks. I'm 29 and I've got a long time to go. The problem is no matter what fund I look at, the 10 year average is not much different than a balanced fund. So what's the point of all the up and down with a risky fund!? None that I can see so far.

I'm sure a lot of people are buying and selling individual stocks and achieving success, but long-term success? That's what I'm trying to figure out.
I think you are correct, that over the long term, low cost, balanced portfolio is going to be really hard to beat. Based on all the research, evidence I think you'll beat the average mutual fund, and probably average investor since they likely underperform the stock market. Think over 20 years. Do not use the recent success of RFD who bought weed stocks or crypto thinking this will continue forever.

The cycle of returns is never consistent, CAGR smooths that out. Actual calendar returns can be high and low.


Have a look at annual return of TD E-series couch potato portfolio since 2007, using 25% bonds rebalanced once a year:
-1.07%
-19.22%
13.87%
8.40%
-1.44%
9.50%
20.24%
11.02%
8.54%
6.64%
10.17%

5.65% CAGR (11 years)
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Nov 9, 2013
4025 posts
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Doesn't really answer your question, but I read this article this morning and I found it interesting. It talks about active management but the ideas can be applied to a DIY portfolio.
Rather, for a strategy to outperform in the long run, it has to be hard enough to stick with in the short run that it causes investors to “fold,” passing the alpha to those with the fortitude to “hold.”
https://blog.thinknewfound.com/2017/10/ ... -managemen
Keep calm and go long
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Aug 31, 2015
247 posts
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Scarborough, ON
xgbsSS wrote: I'd say on an average it is quite possible with relatively limited risk. For example, Sask Pension which is a balanced fund, has averaged just over 8% annually for 31 years.
https://www.saskpension.com/investments.php

And this you have to consider the fact that it is 40% fixed income and relatively higher cost than couch potato, and relatively conservative portfolio.
But that is time period specific through a time when fixed income provided excellent returns. And that period rode a very strong equity market with valuation ratios improving a lot.

The best estimate of the return from Fixed Income in the future is the current yield - in Canada that is about 2% for ten year bonds. Equities have a very high PE right now. That doesn't mean that they are going to crash in the near future but that makes it a near certainty that the return going forward will be low because you would expect a regression to the mean of PE ratios which is around 16. In 1986 the Shiller PE10 was about 13. It is now 32.

Personally I wouldn't expect more than about a 3% real return on your portfolio. With inflation of 2% that would give you a nominal return of about 5%.
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Jul 27, 2017
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rodbarc wrote:
In my opinion, the long term success is possible as long as one can maintain discipline and temperament. That means not being greedy on a extreme bull market (like now) and not being fearful during crashes (which are always temporary). One needs to have a well defined plan tailored to their goals and risk tolerance.

My portfolio obviously didn't look pretty in 2001 or 2008, but since I didn't sell my holdings, these were just paper losses. Short term investing / trading helped to curb some of those paper losses. I believe that a mix of boring, slow, steady long term investing like dividend growth, associated with some growth investing and trading different asset classes based on different strategies provide a great comprehensive portfolio.
^ that

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