From the December 13, 2004 issue of Forbes magazine, page 236:
Since 1926 the S&P 500 has returned an average 10.4 percent per year. As a harbinger of the future this number must be taken with a certain caution: Much of the post-1926 return was from high dividends (averaging 4 percent), while today's yield is only 1.7 percent. Some of the past return was from expansion in price/earnings multiples, an expansion that cannot be counted on to continue. Still, it is not unreasonable to expect an 8 percent annual return from stocks over the next 30 years, or perhaps 7 percent after taxes. You must be prepared to accept lots of uncertainty in your annual returns and some uncertainty in the long-term return. It is quite conceivable that stocks, while you hold them, will return less than your mortgage costs.
Which is just another reason why I am attracted to the idea of paying off my mortgage sooner rather than later.
Wednesday, December 08, 2004
— Posted by Michael @ 12:37 AM
1 Comments:
Amen brother. I wish I could convince more people of this very thing. I would take the sure-fire, fixed, dead-on, certain return of paying my mortgage off quickly over the up-in-the-air, speculation-surrounding long-term return of the stock market any day of the week.
