Time Machine and the Future Returns for Stocks


These days the consensus view, looking out over the next few decades, seems to be we should expect more modest returns from stocks than we’ve enjoyed over the past few.

They see factors forming that look to act as a drag on what we might otherwise historically expect.

Indeed this is the opinion of my personal hero Vanguard founder and creator of index funds, Jack Bogle.

As for me, I confess to having no idea, let alone the Time Machine tantalizingly mentioned in the title. But we can do a little thought experiment together.

Let’s suppose we are all gathered together over beers or coffee way back in 1975. I pick this year as it was the year in which I first started to invest and the year Mr. Bogle launched the first index fund. Plus it is a span of a full 40 years.

Suppose that someone, let’s say you, pipes up and says something like: “I just read an article about this guy Bogle and it seems he just created this thing called an index fund. The idea is that it will buy and hold every stock in the S&P 500 index and just track it with no effort to outperform. Wonder how that’s gonna work out over the next 40 years?”

Well, I might say, as it happens I just returned from 2015 in my new Time Machine. While I was there, I looked up the history of those 40 years and here’s what happened:

As you all know, Nixon took us off the Gold Standard and inflation has been increasing. Turns out, that got much worse. Plus it combined with a stagnant economy and lead to someone coining a new term: Stagflation. Very ugly.

So ugly the stock market languished badly enough that by 1979 no less than Business Week declared:

By the early 1980s mortgage rates were over 15%.

But then, around 1982, the Stock Market turned up and began a rather amazing bull run. At least until the fall of 1987 and Black Monday…

…the single largest percentage plunge in market history. Including the Great Depression.

This ushered in a rather nasty recession that lasted well into the 1990s.

But at the same time some rather remarkable developments began to unfold that in the mid to late ’90s came to be known as The Tech Boom or…

But as you can see, that ended in tears. Terrible tears.

But not as terrible as the tears that were just around the corner with the worst attack on US soil since Pearl Harbor:

Newspaper of 9/11

In turn, this led the US to get embroiled in two very expensive (in both money and blood) wars—Afghanistan and Iraq—that were still going on when I climbed back into my Time Machine in 2015.

Between the tech crash, 9/11 and the ensuing wars, the economy took a major hit. In response, interest rates were brought down even further and credit was made ever more available.

It would take a book or 12 to tell you the story of what the financial industry did with this. 

Suffice to say, it resulted in an incredible run up in housing prices and an even more breathtaking housing collapse.

Which lead to the worst stock market crash since the Great Depression…

Before the dust settled in 2009, the market had plunged over 50% and it looked like the bottom would never come.

But it did, and as I climbed back into the Time Machine in 2015 the market was again going up.

“Wow,” you might say, “that is gonna be one ugly 40 year run.”

Yes, indeed it was.

“I guess that new S&P 500 Index fund didn’t work out all that well then. Better stay away from it.”

Actually, 1975 thru 2015, it had an average annual return of just under 12%.

“Through all that turmoil? No way. Now we know you’re just funnin’ us there JL.”


So, am I predicting 12% returns for the next 40 years? No, of course not.

But I am suggesting 12% annual returns don’t require a perfect Golden Age. They can, and have, blossomed in the midst of turmoil, war, grief and economic collapse.



From Andy in the comments below — Buffett on Bogle

Addendum 2:

Larry Swedroe provides some needed perspective on the Shiller CAPE 10 and the market’s current valuations.

“…because there’s so much variation over time in the equity risk premium, there isn’t any methodology that will produce highly accurate forecasts of stock returns…”

Addendum 3:

Swede’s article came to my attention in Physician on FIRE’s own excellent post:

Can a Bear take away your Financial Independence

Addendum 4: 

The point in the post distilled into a year: 2019. Why you don’t trade on the news



A while back I had a blast with Brad & Jon on their podcast Choose FI. So we did another:

 Stock Series, Part II

and their follow-up conversation about it


A good read…

I have a layman’s interest in physics. The problem is, I am not quite smart enough. Close, but not quite. So in my reading on the subject I always seem to come up just short of really understanding. If this sounds like you, here’s our book! Chapter 13 was my favorite.

And, of course, my own work is now available as an Audio book

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Important Resources

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  • Vanguard.com


  1. Physician on FIRE says

    1975 was a good year. It’s the year I was born — VFIAX and I celebrate our birthdays together. You should have been there for our 30th. We rented a limo and everything!

    I hope the next forty end up giving us a total return as good as the last forty (and the forty before that). Still, I think it’s good to consider Jack Bogle’s thoughts on what the next ten years may bring, and that the sequence of returns for new retirees may be less than ideal.

    Plan for the worst, hope for the best, and know that you should be OK either way.


  2. Mustard Seed Money says

    I wasn’t born yet but I definitely wouldn’t mind taking the cash that I have now and invest it in the stock market 🙂 I think anyone that says they know the future is full of it and that if you stay consistent in your investments you should be rewarded in the long run.

  3. Matt says

    I think it’s worth paying attention to Bogle’s 10-year Expected Returns Outlook (4% and 3% gross for an all stock and blended portfolio respectively) if you’re planning to start an early retirement soon because of sequence of returns risk. For example, anyone who retired in 2000 using a “safe” withdrawal rate of 3-4% saw their retirement dreams evaporate. Choosing a retirement date is in a way a form of market timing. If the sequence of returns risk hits you wrong you can greater hinder the ability to partake in the 30-40 year market periods that are most likely to produce the historical averages. Each person’s situation is different, but folks entering early retirement might at least ponder stock allocation alternatives like paying down 4%+ mortgages or getting educated on less volatile asset classes with more reliable annual payouts. I bring this up not to refute the sage advice of Collins, Bogle and Buffett, but to highlight the need to stay invested for 30-40 years to better guarantee good results. The worst 10 year period in history was up 1.5% annually. The worst 20 year period averaged 2.5%. All stocks all the time doesn’t always turn out well in 10 and 20 year periods, especially if you’re withdrawing vs. adding.

    • Jeff says

      According to portfolio visualizer a 60/40 portfolio is only 9% lower than its starting balance with 4% withdrawals starting in 2000.

    • Danny P. says

      You can solve this problem, if you’re in a position to do so, by having a large cash flow leading into retirement so you don’t have to sell assets during a down market. I’m talking about cash that could cover you for a number of years.

  4. John @ The Millennial Plan says

    Definitely gives some good perspective to those of us that tend to get sucked in when things look a little rough – you could definitely add Brexit to that list…my personal view is that all central bankers can do is smooth out the extremes, but ultimately the market will go where it wants to go. In that sense I feel like the latest experiment in quantitative easing has really just kicked the can down the road further – and you could argue that many of the regulatory changes have decreased leverage in the system specific to banks, but with near-zero rates throughout the world for this long and more money flowing through the system than people know what to do with, at some point we could very well see another correction. Who knows when that’ll be – I guess realistically all we can do is dollar cost average and hope for the best!

  5. Locke says

    I love the blog, and I really wanted to comment on this one. First, I think you’re making a good point…Like you, I’m fully in the market; I’m not waiting for a downturn to time the market. However, two professors of applied mathematics (Robert J. Frey & Nassim Taleb) who are experts in investing (one worked for the Medallion Fund) believe that another Great Depression is highly likely within their lifetimes. In fact, the next depression may be worse than the one in 1929 since people falsely assume that the worse it could get is the previous worst case scenario. They both recommend lower risk in asset allocation. This is just food for thought, and a view that strongly disagrees with the general philosophy of investing in the FI community. https://www.youtube.com/watch?v=27x632vOjXk

  6. earlyretirementnow says

    Hint: make a scatterplot of the Shiller CAPE vs the average real returns over the next 10 years. Pretty strong correlation:
    Can we forecast the S&P500 performance down to the decimal point? Of course not. We don’t have to. But equity valuations matter. If people like Bogle (passive investment guru practitioner) and Malkiel (passive investment guru academic) are pointing this out, maybe the passive investment crowd should listen.

    And by the way: 1975 looked like a very attractive equity valuation. So the fact that equities did well subsequently does not negate Bogle’s points, it actually confirms Bogle’s idea.

      • earlyretirementnow says

        Sorry to disagree, but the valuation was indeed extremely attractive in 1975. With valuation, I mean the CAPE Ratio (around 10) which was much lower than the long-term average and much, much lower than today (around 30).

        But I give you this one: Valuation is often precisely at odds with public perception of the stock market (almost by definition!): In 1975 stocks look unattractive (to the unsophisticated investor), but valuations look attractive. In 2000, stocks look attractive (to the unsophisticated investor), but valuations looked awful.

        • jlcollinsnh says

          You are ignoring the political, social and economic environment in 1975.

          Valuations don’t exist in a vacuum or as simple ratios, which is one reason why using them to predict the attractiveness of investing falls short.

          Would that it were that easy.

          Had you invested at that “extremely attractive” valuation in ’75 you would have had seven lean years ahead of you.

  7. Reverend says

    12% return works for me. Mine is 12.62 annualized, but only since 2007, when I started investing “for real”.
    Of course, while I love that, I also realize that it’s probably a lofty goal to hope for it to stay like that.

  8. Friendly Russian says

    If I had the time machine….
    But I have much better than the time machine, I have some money and some knowledge (thank to you).
    And my time machine is really simple: invest every month no matter what

    • Vorlic says

      Too right, Friendly…

      We know to spend less than we earn, invest the rest and avoid debt!

      Who knows what will happen? No-one. All we can do is learn to protect ourselves and those we love, and the happy side effect is that we get better at living lives filled with the things that matter.

      Yup, there’s a crash coming! So toughen up your defensive right NOW, get closer to the monk, and keep investing as much of the fruit of your offensive as possible.

      There are no Dorian Grays here! ????

  9. Dale says

    Thank you for this fantastic “candle in the darkness” type analysis. The whole world seems to be in financial (and other) turmoil at the moment. South Africa (where I write from) perhaps more so than many other places. I think your post should be taken as a generous dose of common sense. Nobody can predict the future, but those who fail to observe and learn from history are doing themselves a disservice. I am also of the opinion that the “sky is not falling”, although its pretty overcast at the moment… One of my financial independence “heroes” said something along the lines of “earn as much as you can, spend as little as you can, and invest the rest in the stock market index”. Thats exactly what I’m doing and am going to continue to do. You may know who I am referring to? [wink, wink]. BTW, I rate “The Simple Path to Wealth” as probably the best “financial self-help” book of all time. And thanks for the book recommendation. Right up my alley.

  10. Vik says

    The most important thing I have learned about investing from folks like you and MMM is nobody knows what will happen and that’s ok. I always felt like I had to be some sort of expert to invest and knew that I wasn’t so I felt handicapped.

    — Vik

  11. Cubert says

    Good stuff, JL. We might be able to discern a bubble when we’re in one, but predicting a long term trend without a legit crystal ball is foolhardy.

    On the bubble front, I’m stymied in Minnesota with an insane seller’s housing market. Rental 5 is just a dream right now, til that bubble bursts.

  12. Oldster says

    All the noise in the market, all the pundits scrambling to try to get their 15 minutes, the truth is that we just don’t know what is going to happen. Have a cash reserve, invest regularly, hope for the best. Throughout our country’s history that would have served you well 95% of the time. If you just happen to retire during the other 5%, well, thems the breaks.

    • Matt says

      Look, I’m not one to argue with Warren Buffett or Jim Collins for that matter. The Bogle approach is indeed a magic one, as described by the CNBC article excerpt I posted below. But I think it’s perfectly appropriate in an educated personal finance community that favors the Bogle approach to talk about things like sequence of returns risk, stock valuations, the safe withdrawal rate and alternative asset classes. I find it unfortunate that such topics are treated as sacrilig blasphemy – wantonly shot down and ridiculed as foolish banter. It’s not. And it’s not “market timing talk” either. It’s retirement research and academics. It’s like yelling at science.

      Shaming discussion on topics that do not perfectly fit the Buffett/Bogle plan is not necessary or helpful. Academic concepts are not threatening. You can explore these topics and dollar cost average into low cost index funds at the same time. It’s not an either or thing.

      Educating oneself is a good thing. I did it years ago on real estate and I thank my lucky stars regularly that I did as I have a steady flow of reliable tax advantaged cashflow hitting my account regularly (my RE portfolio low LTVs and staggered maturity dates). I do not care what the properties are worth because I do not intend to sell them. My volatility risk is greatly reduced to vacancy and rental growth rates which are far less volatile than equities. My point here, is not to pitch RE, but to say there is room to explore and allocate outside the Bogle pie chart, and there is an abundance of research to condone such an approach (and others too).

      So I say to the world, definitely keep dollar cost averaging into low cost stock index funds strategy going strong. That’s awesome. But feel free to learn and explore some of the eye opening more academic stuff about the stock market. Some will blow your mind and might be useful to your planning strategy: arithmetic vs. geometric returns; Dalbar’s QAIB; sequence of returns risk; and you can find more at Retirement Researcher dot com (I’m unaffiliated). And have fun reading about other asset classes. Google “What you can learn from my real estate investments” by Warren Buffett. Listen to the interesting podcasts on Bigger Pockets for com (I’m unaffiliated).

      “There is a principle which is a bar against all information, which is proof against all arguments, and which cannot fail to keep a man in everlasting ignorance – that principle is contempt prior to investigation.” – William Paley

      From CNBC’s On the Money 1: Buffett on retirement
      Friday, 12 May 2017

      “If you’re looking for a simple plan to build your retirement savings, one of the world’s most successful stock market investors has some clear advice.

      “Consistently buy an S&P 500 low-cost index fund,” Warren Buffett told CNBC’s On The Money in an interview recently. “I think it’s the thing that makes the most sense practically all of the time.”

      And he suggests staying the course, despite market fluctuations. “Keep buying it through thick and thin, and especially through thin,” the chairman and CEO of Berkshire Hathaway said with a laugh.

      On Friday, stocks dipped on mixed economic data and poor results from major retailers. Buffett suggested investors should take gloomy news with a grain of salt, however.

      “The temptation when you see bad headlines in newspapers is to say, well, maybe I should skip a year or something. Just keep buying,” he said. “American business is going to do fine over time, so you know the investment universe is going to do very well.”

      As proof of the record of long term growth, the “Oracle of Omaha” remarked that the Dow Jones Industrial Average “went from 66 to 11,497 in one century,” recalling the index’s exact close at the end of 1999.”

  13. HeadedWest says

    The demographics in the U.S. appear set up to give us pretty strong growth over the next few decades. Our consumer-driven economy is fueled primarily by persons aged 35-55 – the highest spending age group, busy having kids and buying first homes and then second homes, two or three cars, clothes and piano lessons and vacations for everyone, etc. Right now, the cohort in this group is Gen X. There are about 65 million of them. This year, Millennials are just starting to turn 35 and begin displacing Gen X in this group. Eventually there are forecast to be 80-85 million Millennials in the US (including immigration). So there will be a significant increase in the amount of people earning dollars that will be pumped into the consumer economy.

    “We note, with a more than a little bit of curiosity, that the last secular bull market in U.S. stocks began in 1982—just when the first Boomers turned 35.” – https://www.morganstanley.com/ideas/millennial-boomer-spending

  14. Financial Panther says

    It’s really funny when people try to predict what the future will look like. I look back at the time I was in college, back in 2005 and what things look like today, and it’s crazy – the world is just a totally different place than it was in 2005. Facebook barely existed (I remember that summer before college when people told me I needed to get on Facebook). No iPhones. No Twitter (sad…how would we get news from the prez?). No YouTube. Netflix was still a DVD service. Wikipedia was barely a thing (seriously, it made book reports much harder to do). And of course, no Uber or Airbnb.

    If the world can change that much in just a decade, imagine how different it’ll look in 2027. Or 2037. That’s pretty much the way I think when anyone gives me predictions on the future. I’m only 30 years old, and the world I lived in at 18 years old is completely different from the world an 18 year old lives in today. Who knows what it’ll look like later.

  15. Bonnie Belza says

    Like everything in life, investing is best when it is consistent and when we deal with the uncontrollable events in our lives by maintaining that consistency.

  16. FIRECracker says

    As FIRE people, we don’t need to predict the future. We make our own futures 🙂

    Whenever people freak out about a market crash, or how the 4% rule no longer works in this low interest environment, I tell them this. FI people didn’t become FI blindly and never tracking their progress. We make backup plans, and backup plans for the backup plans. When shit hits the fan, we’ll know exactly what to do. So I never try to predict the future. I just make sure I’m ready for all worse case scenarios 🙂

    As your post clearly shows. Nothing ever goes down or up forever. Whatever goes up must come down, and whatever goes down will eventually go back up. By over the long term, progress never stops.

  17. Jason says

    I was trying to tell that someone today who insisted that investing is too risky. He never game me an alternative to do with his money. To each his own I guess, but this is why there will always be a need for financial advisers and others b/c people won’t believe even things that all kinds of historical evidence.

  18. saveinvestbecomefree says

    The price matters when you invest. A lot. People seem to dismiss this too easily. Given the great gains we’ve had, I believe those that say the next ten years for US stocks are likely to give below average returns (which is why I’ve lowered my US stock allocation).

    But over the next 40 years (more relevant to a lot of people), we’ll see a good long-term reward for investing in businesses consistent with history. Maybe not quite 12% but probably 8% or more (which I’d take any day). During that next 40 years, the next 10-year return expectations will change from low to high as big drops and big gains happen (the timing of which is impossible to predict). You can buy-and-hold and likely do find over very long periods or you can try and do a bit better with disciplined asset allocation shifts based on valuations (i.e. rebalancing or a more aggressive form of tilting).

  19. Friend says

    I am concurrently reading “The Four Pillars of Investing.” One of the recurring themes is that in times of volatility, returns are higher due to the (perceived) increased risk of investing. Wouldn’t, then, a person from the past look at a future of such volatility and say “Wow, this is going to be a crazy 40 years. I better invest now so I can cash in on all the inreased returns that go hand-in-hand with the risk!”

    It seems that the 12% returns of the past did not happen despite the volatility, they were caused by it. And maybe the future predictions of lower returns are essentially predictions that the Perfect Golden Age is in the near future, meaning low risk investing, and therefore low returns.

    • Yaacov says

      Sorry, but no. If that was the case than all these smart-beta indexes which go for the volatile stocks in the index would have outperformed the index.

      Besides, there is no way that 40 year returns are correlated with current volatility which causes the perceived risk increase. You need to substantiate that claim with data.

  20. Zack says

    To keep this simple, let us say I am retired and all I own is $1,000,000 in VTSAX and it pays a 2% dividend yearly. I want to be conservative on my withdrawal rate, so want to do 3% rather than 4%.

    Am I better off just pocketing the 2% dividend and selling 1% of my stock or having the dividend be reinvested and selling 3% of my stock?

    Capital gains taxes would be lower doing the latter, but then I get a bit tripped up on qualified dividends and what that means for tax implications, etc….

    • jlcollinsnh says

      It depends on where your million is held…

      —In a tax-advantaged bucket like an IRA or 401k, you just set it up to pull your 30k (3%) divided as you choose: Weekly, monthly, quarterly… Dividends don’t matter as they are not taxed and everything you withdraw is treated as ordinary income. So just have “the dividend be reinvested and selling 3% of my stock”

      —In a regular, taxable account your dividends are taxed each year regardless of whether you take or reinvest them. So you are “better off just pocketing the 2% dividend and selling 1% of my stock”

  21. Rich @ pennyandrich.com says

    Hi Jim, I appreciate this post. It’s interesting to think of all the negatives that stocks have overcome.

    That said, one could also consider this in the reverse — think about the incredible bubbles required to produce such returns. There have been 2 clear bubbles that fueled stocks — first in tech and then in housing. Some would say we are in the 3rd bubble, fueled by QE. And even though it didn’t “feel” right to invest in equities in 1975, the P/E of the market was close to 8. No one would say that 8 = overvaluation.

    One common denominator since 1975 (and more specifically since the early 80s) has been the easing of monetary policy. We’ve gone from interest rates above 10 all the way to zero. And then we juiced this further via QE. Because we are already at near zero, any future stock market crash response would need to involve further monetary easing of some kind.

    Anyway, what market bears are saying (and I’d count myself one) at this point in time is don’t look at what the market can overcome; look at the market’s tailwinds and consider where we are in that bigger picture. We are not at 10% interest rates, P/E of 8, in a pre-bubble bearish environment. Caution, I think, is warranted.

    Personal investing strategy, of course, is a different matter altogether and I wouldn’t advise anyone to alter their plan — these are just my opinions. Again, appreciate your post and I enjoy hearing views that challenge my own. Best –Rich

  22. Hatton1 says

    1975 was a great year. I graduated from high school that year. I started investing in 1989 so I missed the 1987 crash. I bear the scars (psychological) of 2000 and 2008. All I can say is have a plan and stay the course.

  23. Lynne says

    “Returns will be lower than average over the next decade.” -some people

    “Automation will eliminate many jobs, boost corporate profits higher and higher, and widen the gap further between labour and capital.” -other people

    You can make credible arguments either way as to whether this bull market still has lots of room to run. Shrug. I’m just going to keep investing my savings every month.

  24. Kevin says

    I enjoyed hearing you again on the ‘Choose FI’ podcast yesterday. You really tied your newest article into the podcast nicely. It is interesting how time has a way of ’rounding out the edges’….when in fact it has been a tumultuous time (and most likely always will be) for investing. Just stay the course…

  25. Ten Factorial Rocks says

    Much needed reminder of the eventful 40-year market history, Jim. And you are a master at telling it as it is! To sooth my nerves, I did my own SWR calculation by coercing a good calculator to consider today’s extraordinary low bond yields, forced deliberately high equity allocation (100%) to maximize volatility to see where the failure edge is, also by demanding a 100% probability of success. I got 3.27% (details on my website), which I think is ultra-conservative given the assumptions behind it. I think 3.5%- 4% WR is fine even for conservative simulation nerds like me, and the floor isn’t much below that, okay 3.27% if you want to get precise. ???? Staying at 3.5% or thereabouts will ensure you remain FI even if a grizzly bear visits soon.

    And of course, I will hope to visit you in NH for your 80th birthday. I was already a toddler when Vanguard’s first index fund was created so I will be happy to remember the passwords to my Vanguard accounts when we both reach 80!

  26. Mrs. Adventure Rich says

    I just heard you go through this on the Choose FI podcast as well… thank you for sharing in an article format too! I have throughly enjoyed your straight forward, simple approach to investments and finances. “A Simple Path to Wealth” was a pleasure to read and very helpful to our family as we pursue FU money and FI!

  27. Mark says

    While we will never know what the future return will be, looking forward when you are estimating your own future investment value, what annual return do you use for stocks (i.e. index fund). I am retiring in 10 years and use a 7% annual return in my assumptions. I think that’s not too high or not too low.

  28. Brian Jones says

    Dear Jim,

    I hope you are doing well! I wanted to ask if it is possible to send you an inquiry about our particular financial situation? My wife and I just finished reading your book (The Simple Path to Wealth, which we thoroughly enjoyed) and just wanted to inquire about our present situation to see if what we are doing would be something Jim himself would recommend. The inquiry is not long. I am sure you get many questions like this and are rather busy, but just wanted to see if you had any thoughts or questions.

    Thank you so much for your time and consideration!

    With peace,
    Brian Jones

    • jlcollinsnh says

      Hi Brian…

      Unfortunately, I am unable to provide individual financial counsel.

      However I do try to answer specific questions here on the blog, if you care to ask.

      But having read the book, you likely already know what I’m going to say. 🙂

      • Brian Jones says

        Hi Jim,

        Thanks for the reply! No worries at all. I will go ahead and ask my specific question here to see what you think. You are right in that your book has illuminated (and answered) many of the perplexing questions I had. So, thank you for all that, and then some.

        I will keep this brief, but descriptive enough. My wife and I pull in $60,000/year, and have about $15,000 remaining in debt (all from my school loans). We recently opened an account with Charles Schwab investing in the low-fee index funds, as well as a Roth IRA, which was carried over from AmeriTrade from my years teaching middle school. Overall, our investments are $20,000 without us doing anything to them (until now). So my question is this: how much would you recommend putting towards knocking the debt out quickly, and simultaneously saving and investing? Any thoughts or insights you may have are humbly welcome. Thank you again for your wisdom; we are now encouraging our friends, family, and colleagues to get your book.


        • Reverend says

          What’s the interest on your debt?
          If it’s low, what would you do with the money that would earn you more than that?

          If you’re new/inexperienced/tentative/whatnot, then just knock out that debt. Just the feeling of being debt-free is amazing. You’d save whatever interest rate you’re paying on it and then you can focus entirely on investing your surplus and shaving your expenses.

          That’s when you can revisit Jim’s Stock Series or throw it in VTSAX, or if you prefer to peruse Motley Fool Stock Adviser and take their advice.

          Any of them will be better than savings accounts.

          You’re already doing better than most given what you’ve told us about your current accounts.


  29. Raman K says

    Hello Jim,
    Very informative post as always. Really enjoyed the comic strip at the end too! I have been reading your blog for some time now and just wanted to say Hi! I think your Stock Series is the Holy Grail for investors everywhere.
    Anyway I am a newbie getting started on the journey to financial freedom. I hope I will get to meet you one day and personally thank you for all the wonderful work you have done through your website.

    • jlcollinsnh says

      Thanks Raman…

      …and thanks for checking in.

      If our paths cross in the future, I’ll buy the coffee. 🙂

      • Vorlic says

        Hey, Mr Collins, concentrate on Chautauqua UK! ????

        Apologies, I am just miffed we couldn’t make the first one. Hope it’s going well and you and the world domination cult leaders are getting as much out of it as you’re all doubtless putting in.

      • jlcollinsnh says

        We are right in the middle of Chautauqua and having an absolute, and very British, blast!

        Off this PM for afternoon tea in Stratford upon Avon. 🙂

      • Raman K says

        Oops! Left the wrong email id and website on my comment. That’s probably why I didn’t get notified of your response. Anyway, I look forward to coffee! I just mentioned your stock series on my blog – lifegrowthfinance.com

  30. ZJ Thorne says

    As I have no time machine, I am just going to keep doing what makes sense. Investing. Even if the markets become and stay terrible for a long time, investing will serve me better than consuming.

  31. Miles says

    Hey Jim.
    I am a guy who has been investing into real estate and was thinking that maybe moving to stocks as in your awesome book was a better idea (less work, better yields etc.), and was thinking about switching. And was ready to do it. Created all the accounts, set up automatic transfers and purchase of VTSAX.

    I got to admit hearing from Bogle that we can expect only 4% return has given me a serious pause.

    4% is super low. So low that I am pretty positive that I can do better than that with real estate (just based on what I have done so far)

    Example: Recently I bought a duplex for 83000 which nets 1400 in rent. Deducting 40% for repairs, capex, management, vacancy and such it nets over 550 in pure profit a month.
    Even with modest appreciation of 1% (not even following inflation) of home value I would be over 10% annually over the 30 year period.

    That is without even getting into 1031 exchanges, depreciation, mortgage deductions and other real estate advantages.

    So now i am in a funky situation. I am to stop of what i am doing based on a trust that what Bogle did was genius in a realm of investing (and i truly believe that).
    But not to listen to him when it comes to predicting?

    I got to admit this is confusing me greatly.

    Thank you for your great blog, and an even greater book.

    • Matt says

      Hi Miles,

      I too am a real estate guy (having been a professional stock guy pre-FIRE). You’ve actually got a good handle on it. A well executed real estate portfolio can produce 10%+ in tax-advantaged and relatively steady cashflow. This far exceeds Bogle’s Expected Returns Formula predicting average annualized gross returns of 4% over the next 10 years. I stress GROSS. That 4% only declines after taxes and fees and if you add any bonds to the mix. And I stress AVERAGE. The stock market will be far for volatile than your rental income because that income is most sensitive to vacancy and rental growth rates which are far less volatile than the stock market. In my opinion you’d be making a mistake to sell your real estate, and suffer capital gains tax, and forego your 10%+ tax shielded income to switch into equities. My plan is to continue to dollar cost average into workforce affordable residential rentals for the foreseeable future. When stocks look cheap again, as they certainly will again someday in the future I might look to dollar cost average into index funds again with some of my networth. But all the benefits of playing what the Bigger Pockets guys call the BRRRR strategy are hard for me to justify allocating to stocks at any price vs. real estate. The main barrier of entry to real estate is all the extra work and complexity that can go into it. But, in your case, you’ve already crossed that obstacle. I’ll be curious to hear Jim’s response. Thanks for posting! Matt

      • Miles says

        Hey Matt,

        Thanks for answering.
        Let me clarify, I am not thinking about selling what I already have.
        What I was contemplating was stopping new real estate acquisitions, and just move all my new money to stocks from now on. I wouldn’t do any bonds, I am still working and creating income, so no need for bonds.

        I was thinking conservatively and was expecting at least 7% from the stocks, and in that world I would forgo real estate for super passive index investing.

        But 4% is low. Like really really low and I’m not sure is it the right way to go, especially since I think I could continue buying properties like that (I have already done it, have people to help me etc., and if i can do it in a hot real estate market like now, i ought to be able to do it when it gets better).

        But maybe we should not listen to Bogle about the future? After all he was the person saying “nobody knows nothing”.


    • jlcollinsnh says

      Hi Guys…

      I wasn’t actually going to respond as you both seem to have a good handle on this. Plus, I really don’t see a question here.

      But, since you are curious Matt…

      I see stock index funds and investment RE as two very different animals, and you both already know my take on stocks.

      No question RE can be an excellent investment and it can provide great returns. But it also requires more effort and expertise to do well. A bit of an investment/side hustle hybrid.

      If you enjoy the work and have developed the expertise, you very likely will do at least as well as stock index funds. But then, the funds take none of your time. It is a very personal call.

      As for Mr. Bogle’s 4% predicted return, he has strayed into the murky world of predicting the future. He might be right. Or not.

      He is certainly far more conservative than I.

      He and I both agree the road ahead is likely to be rocky but, as I try to point out in the post, that doesn’t mean the market can’t produce solid returns.

      I have no idea what the market will do going forward. But I do know, from first hand experience, that while RE can be very profitable, these days it is too much like work for me. 🙂

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