Re: How do you invest?
Most "experts" think that, long-term, investing in a broad market portolio of shares will give you a return of about 5-6% above inflation, before expenses. Total expense ratio of a typical mutual fund is close to 2%, so that eats up the expected inflation amount. Say 5-6% per annum.
But, this only works if you invest at an "average" valuation for the market. Currently the market is on the expensive side. Depends on who you believe in, but 25%-60% overvalued against long-term averages. So 3-4% long term.
Long government bonds yield 4.75% per annum.
If you look at real estate, house prices in the US are above their long-term price trend, so no relief here either. Advantage is you can gear up by borrowing if prices rise, but you're also geared on the downside too.
As elsewhere on the forum, if you need financial advice, get a good professional to advise you. Just don't believe you can be too optimistic.
Last edited by oldfogey; 10-25-2004 at 9:50 AM.