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Thread: Realistic rate of return

  1. #1

    Realistic rate of return

    Whenhaving a large settlement, I'm looking to go for a lump sum. I will not be doing structured settlements, naturally I have talked with different financial institutes and brokers big company and small. The banks seem to start with a realistic 2 to 5% but even companies like investor group etc Saint 8% is realistic they have numerous portfolios and pie graphs showing an average of a percent salt, some years it's 5% but then the next year it's upwards of 13% . To the more experienced investors of their utilizing compound interest and diversified portfolios are you really to expect only 2% or is a 5 to 8% realistic?

  2. #2
    Expected return depends on many factors. Risk tolerance, time, etc.

    I would highly recommend that you consult with an estate planner familiar with special needs trusts BEFORE accepting any payments. Options change drastically after accepting payment. Placing a settlement into an SNT could significantly impact your long term financial picture. These trusts also have some tax considerations that should impact your investment strategies.

    https://en.m.wikipedia.org/wiki/Special_needs_trust

    Good luck James!
    Last edited by jeft; 01-07-2016 at 11:41 AM.
    Jason

    C5/6 Complete - water skiing accident 1994.

  3. #3
    Over the long term, the stock market has averaged 7-8%. Anyone who promises more than that would be questionable, IMO. A lot of so called experts these days say the new normal should be an expectation of 5-6%. I would say 2% is a pretty low expectation. You can get that right now in a 5 year CD with absolutely no risk and no need to pay anyone. Go to an online bank and open an account.

  4. #4
    Obviously with my settling my risk preference would be low to moderate therefore 6-8%. Which is what everyone has which is what everyone has told me other than the bank. a 2.5 pot Lucky to walk away with 1.8 to 1.9 could easily live with 6-8%. I agree luckily nobody has promised me more then 8% I just noticed on the pie graphs and other charts that when there's a low year often it's followed by a surprisingly high year obviously nothing is guaranteed, just my own observation . from very "new" eyes as I'm just getting started

  5. #5
    Quote Originally Posted by tarantella View Post
    Over the long term, the stock market has averaged 7-8%. Anyone who promises more than that would be questionable, IMO. A lot of so called experts these days say the new normal should be an expectation of 5-6%. I would say 2% is a pretty low expectation. You can get that right now in a 5 year CD with absolutely no risk and no need to pay anyone. Go to an online bank and open an account.
    CD at 5%, Really? Where would that be? Sorry, but think getting half that rate would be a stretch.

  6. #6
    As Jeft points out, your expected rate of return depends on your risk tolerance. If you're not comfortable watching your money ride the market roller-coaster, then you might be better off with lower expectations for your rate of return. I'd also factor in age. If you need access to your money in the short term and not have the luxury of time should the markets take a dive, then you might be better off setting your sights on investments that are less risky.

    I'd suggest you find a financial advisor, and preferably one who is paid a flat fee for their advice (and in particular NOT paid a commission based on the financial products that they sell to you).

    Good luck!

  7. #7
    James, please be careful with planning. A pool of money can disappear much faster than it may seem. I would think that 5%-6% would be a better estimate and no one really knows for sure. You also don't want to forget about inflation. If you get 6% and inflation is 3.5%, your net would be around 2% (lots of factors to consider though). That would likely be a better number to use for planning.

    I certainly don't want to make things more confusing or be a downer. Again, I would highly recommend checking with an elder care attorney as mentioned above.

    I do wish you the best regardless of how you proceed!
    Jason

    C5/6 Complete - water skiing accident 1994.

  8. #8
    Truth be told I need to be on the verge of a additional large settlement 10+. If that's the case as long as I'm not a idiot I can live a very comfortable lifestyle ( which I'll live in a small home to instead pursue treatments and easily beat inflation, As well as compound my interest My concerned with this money Automobile insurance yes invest it , But mainly to actually have it in my bank account or investment brokerage in my name Therefore if anything "happens to me" it goes to SCI research divided to labs of my choice.

    So it is better to have a broker is that you pay directly, rather then one that distributes your money through larger firms and makes a commission through them??

    rusty you say a 2.5% is a realistic annual rate of return. Everything I've seen that is pretty damn low .almost make that in a tsfa

    Seeing chart the other day that since Obama started as president 2008 Apple, Google etc. have gone up 500 to 300% you're pretty Balsley to invent best all your money in the equities, just saying that the market always seems to go up even when it drives spend less waited out

  9. #9
    You sound very inexperienced with investing, and long term financial planning. Jeft offers you excellent advice. Completely agree with talking to an Elder Care attorney, and very cautious long term planning with reputable companies like Vanguard. Good luck. Be smart.

  10. #10
    James, I was referring to a CD.

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