All Forum Posts by: David Yee

Hello! At the moment my retirement investments are primarily focused on the S&P 500. I've used a number of different retirement calculators but am having a bit of difficulty navigating them; especially with respect to accounting for inflation. What average percentage of growth should I expect from the S&P 500 year over year? I've seen percentages range from 7% to 11%. How should I account for inflation?

Thank you!

Hi David, the average return on the S&P 500 is 11%, this only if you buy a low cost index fund like VOO and not a mutual fund that might charge 1+% every year in fees. Inflation averages 3%, so the adjusted return could be 8% per year, but the stock market deviates an average of 15% annually, so your sequencing of returns risk is high. Returns in real estate are usually going to be less than this, but real estate is setup to use leverage, so returns can be a lot higher if leveraged correctly and the standard deviation is much lower, so the sequence of returns is lower and real estate has a lot of tax advantages that stocks don’t have, such as depreciation.

Thank you Josh. I think the adjusted rate of return is what I am looking for.

0 Votes

Quote from @Steve Vaughan:

Quote from @David Yee:

To me, the historical and anticipated future returns of the S&P is literally inflation plus 4% over time.

Inflation is supposed to be baked in, hence the 4% rule of safe/perpetual withdrawals. As costs of goods rise, so should profits, so should earnings, so should values.

Hopefully last year wasn't our 1st year of retirement. SP lost like 22% and inflation rose about 6%. Double ouch.

As someone FI from RE but still building my SP/ market portfolio, the drop was beneficial. It was beneficial to anyone stil in the growth phase of SP building. Tough to realize in the moment watching our portfolio values drop.

IMO the only better or equal to inflation protection investment out there of course is RE.

Thank you Steve! I appreciate your analysis

1 Vote

Thank you!

2 Votes

@Leo R. Thank you for this insight! I will definitely focus on Class A & B neighborhoods

0 Votes

San Diego, California

Quote from @Bruce Woodruff:

Quote from @David Yee:

Quote from @Bruce Woodruff:

Yes, hire a local Home Inspector...that's what they do. They can also recommend a good GC to do repairs (hint - don't hire a Home Inspector who does their own repair work :-)

That's a great tip @Bruce Woodruff! Can I hire a local Home Inspector to walkthrough the property(ies) that I am considering purchasing before I place an offer so I have an idea of the estimated cost of rehab?

A licensed Home Inspector will not just do walk-throughs due to liability, and plus they do not know houses the way a GC does. So get a GC to do your quick walk throughs and throw a budget number at you, then if that works, hire a Home Inspector to do his job and inspect the detailed stuff. It's good to have 2 different sets of eyes on it anyway, because they look at different things different ways....

That makes sense. I'll try to get a GC to walk the property with me

0 Votes

San Diego, California

Quote from @Jordan Moorhead:

@David Yee do you know any other areas? I invest out of state but only in areas I know where I have people I trust on the ground.

Hello @Jordan Moorhead. I don't know any other areas very well. I've spent my entire life in San Diego

0 Votes

San Diego, California

Quote from @Nicholas Coulter:

@David Yee I would look to start to build out your team. The man thing is to get a good agent in your area and also get them to introduce you too all the other parties you need to meet!

Thank you @Nicholas Coulter! I will start forming the Core Four

0 Votes

San Diego, California

Quote from @Bruce Woodruff:

Quote from @Steve Bebek:

Quote from @David Yee:

Quote from @Bruce Woodruff:

Yes, hire a local Home Inspector...that's what they do. They can also recommend a good GC to do repairs (hint - don't hire a Home Inspector who does their own repair work :-)

Not sure a seller would allow that before a accepted off.

No, I don't think they will allow a Home Inspector either, that's why I said to get a GC to walk the property before he placed an offer. That should get him a decent budget number.

This is very helpful. Thank you all

0 Votes

San Diego, California

Quote from @Alex Gunnerson:

Hi @David Yee,

You will want to have somebody who can be your boots on the ground, who can check out the property and send you videos.

Thank you @Alex Gunnerson

0 Votes

San Diego, California

Quote from @Bruce Woodruff:

Yes, hire a local Home Inspector...that's what they do. They can also recommend a good GC to do repairs (hint - don't hire a Home Inspector who does their own repair work :-)

0 Votes

San Diego, California

All Forum Posts by: David Yee

David Yee has started 17 posts and replied 68 times.

Post: Calculating S&P 500 growth for retirement

Post: Calculating S&P 500 growth for retirement

Post: Calculating S&P 500 growth for retirement

Post: How to inspect house when purchasing out of state

Post: How to inspect house when purchasing out of state

Post: How to inspect house when purchasing out of state

Post: How to inspect house when purchasing out of state

Post: How to inspect house when purchasing out of state

Post: How to inspect house when purchasing out of state

Post: How to inspect house when purchasing out of state