I have a question that may be multiple parts. I’ve been using compound interest calculators and the 8% average return assumption across the next 15-17 years (based on when I might want to retire) I’m 38 now and would 53-55.
However the calculators don’t account for increases in contribution amounts. So I just got projection lab to help.
Here is the crux of my issue: I used historical analysis option and then use a fixed rate of return option. Obviously with fixed rate you assume you never really go down, but I figured this is smoothing out all the big down years and the large up years so it should still workout. BUT when compare the two types of analysis I get drastically different numbers. 10 million with fixed at 55 vs 3M using historical. I listened to the guardrail episode with Aubrey who suggested using historical. Which I guess means including all the down periods like Great Depression, stagflation, dot com bust etc.
but I don’t want to necessarily assume the worst and just keep working longer to hedge as you and your guest discuss, giving up time or invest way too much and not enjoy enough of now.
Any suggestions how to reconcile this? Or is this just some psychological brain fart where I just have to wait and see and adjust? I know time is precious in both life and compounding time. Any thoughts?? Thanks if you get a chance to bring this up. Or I’ll just post it in the group as well.
