What is a decent rate of return for investing in the markets?
Don't ever, ever, ever let someone else handle your money, unless you want somebody else have your money. Nobody can guarantee a return on stocks. That's utter bullshit. Stock go up and down according to market emotions. How can your guru predict the market's future emotions? Keep your head cool with stocks. Only buy when you are 'sure' you are not going to need the money in the next 10 years. Buy obligations before stocks, invest in 'defensive' stocks before investing in 'aggressive' stocks. Keep more money in obligations and defensive stock than in aggressive stocks. See how you can do by yourself. Before buying (or selling) anything, think about the risks, the market, the expert's opinion about this investment, etc. Set a target for selling (and adjust the target according to the performance of the stock). Before investing, try to learn about investing, really. I've made my mistakes, you'll make yours, let's hope they're not the same :) Seems like you should be aiming to beat the professionals, otherwise why not let them handle it? So 4.01% is a logical start. Perhaps round that up to 4.05% "If someone is guaranteeing X%, then clearly you can borrow money for less than X% (otherwise his claim wouldn't be remotely impressive).  So why not do that if his 4% is guaranteed? :) Anyway, my answer would be that beating the market as a whole is a ""decent"" rate of return.  I've always used the S&P 500 as a benchmark but you can use other indices or funds." "What do you think is a reasonable rate of return? A reasonable rate really breaks down into three things: opportunity cost, what you need, and risk appetite. Opportunity cost comes into play because whatever returns you make should at least exceed, after expenses, the next best option.  Typically the ""next best option"" is the risk free return you can get somewhere else, which is typically a savings account or some other (safe) investment vehicle (e.g. a guaranteed investment certificate/GIC, bonds, etc).  But, this opportunity cost could also be an alternative investment (e.g. an index ETF), which is not necessarily risk free (but it may represent the next best option). Risk appetite comes down to the amount of risk you are willing to take on any investment, and is completely subjective.  This is typically ""how much can you sleep with losing"" amount. What you need is the most subjective element.  All things being equal (e.g. identical risk profiles, access to same next-best-thing to invest in), if your cost of living expenses are only expected to go up 2% per year, but mine are expected to go up 3% per year, then my reasonable rate of return must exceed 3%, but yours must only exceed 2%. That said, an appropriate return is whatever works for you, period.  Nobody can tell you otherwise. For your own investing, what you can do is measure yourself against a benchmark.  E.g. if your benchmark is the S&P 500, then the S&P 500 SPDR ETF is your opportunity cost (e.g. what you would have made if you didn't do your own investing).   In that way, you are guaranteed the market return (caveat: the market return is not guaranteed to be positive). As an aside.. Don't ever, ever, ever let someone else handle your money, unless you want somebody else have your money. There is nothing wrong with letting someone else handle your money, provided you can live with the triple constraint above.  Investing takes time and effort, and time and effort equals opportunity.  If you can do something better with the time and effort you would spend to do your own investing, then by all means, do it.  Think about it: if you have to spend 1 day a month managing your own investments, but that day costs you $100 in foregone income (e.g. you are a sole proprietor, so every day is a working day), that is $1,200 per year.  But if you can find an investment advisor who will manage your books for you, and costs you only $500 per year, what is the better investment?  If you do it yourself, you are losing $1,200.  If you pay someone, you are losing $500.  Clearly, it is cheaper to outsource. Despite what everyone says, not everyone can be an investor.  Not everyone wants to live with the psychological, emotional, and mental effort of looking up stocks, buying them, and then second guessing themselves; they are more than happy to pay someone to do that (which also lets them point the finger at that person later, if things go sideways)."
From strictly a gross revenue point of view, the parking spot is going to yield a higher rate (5.4%) versus a 3% savings account, assuming you have it rented all year. Your break-even point (not considering other expenses) is 7-8 months of rent per year. So, what are things to consider? Here's a few to start with. The parking spot is a nice investment in that you get a decent return, and the potential for appreciation. The savings account/CD will give you a fixed return with no risk.  To support your decision, make sure you understand all of the costs and understand all of the downside risk. If you're 50 and this is alot of money to you, be conservative. If you're 25 and have a good job, you can afford to chase the yield. "The answer to your question depends on what you mean when you say ""growth"".  If you mean a literal increase in the aggregate market capitalization of companies, across the entire market, then, no, this sort of growth is not possible without concomitant economic growth.  The reason why is that the market capitalization of each company is proportional to its gross revenue, and the sum of all revenue from selling ""final goods"" (i.e., things purchased and used by consumers) is, apart from a few technicalities, the definition of GDP.  The exact multiplier might fluctuate up or down depending on investors' expectations about how sales will grow or decline going forward, but in a zero-growth economy this multiplier should be stable over the long run.  It might, however, still fluctuate over the short term, but more about that in a minute.   Note that all of this applies to aggregate growth across all firms.  Individual firms can still grow, of course, but as they must do this by gaining market share from other companies such growth would be balanced by a decline for some other firm.  Also, I've assumed zero net exports (that's one of the ""technicalities"" I mentioned above) because obviously you could have export-driven growth even if the domestic economy were stationary. However, often when people talk about ""growth"" in the market, what they really mean is ""return"".  That is, how much does your investment earn for you.  This isn't really the same thing as growth, but people often think of it that way, particularly in the saving phase of their investing career, when they are reinvesting their returns, and therefore their account balances are growing.  It is possible to have a positive return, averaged across the market, even in a stationary economy.  The reason why is that there are really only two things a firm can do with its net profits.  One possibility is that it could invest it in growing the business.  However, there is not much point in doing that in a stationary economy because by assumption no increase in aggregate consumption (and therefore, in the long run, aggregate production) are possible.  Therefore, firms are left with only the second option, which is to pay them out to investors as dividends.  Those dividends provide a return that is independent of economic growth. Would the stock market still be a good investment in such an economy?  Yes.  Well, sort of.  The rate of return from firms' dividend payouts will depend on investors' demand (in aggregate) for returns on their investments.  Stock prices will rise or fall, causing returns to respectively fall or rise, to find that level.  If your personal desire for returns is lower than the average across the investing public, then the stock market would look like a good investment.  If your desired return is higher than the average, then it will look like a poor investment.  The marginal investor will, of course be indifferent.  The practical upshot of this is that the people who invest in the stock market in this scenario will be precisely the ones for whom the stock market is a good investment, given their personal propensity to save and desire for returns, and so forth. Finally, you mentioned that in your scenario the GDP stagnation is due to declining population.  I am less certain what this means for investment, but my first thought is that you would have a large retired population selling its investments to fund late-life consumption, and you would have a comparatively small (relative to history) working population buying those assets.  This would lead to low asset prices, and therefore high rates of return.  However, that's assuming that retirees need to sell assets to fund their retirement consumption.  If the absolute returns on retirees' assets are large enough to fund their retirement consumption then you would wind up with relatively few sellers, resulting in high prices and therefore relatively low rates of return.  It's not obvious to me which effect would dominate, and so it's hard to say whether or not the resulting returns would look attractive to the working-age population." If you are in an economy which has a decent liquid debt market (corporate bonds, etc.), then you may look into investing in AA or AA+ rated bonds. They can provide higher returns than bank deposits and are virtually risk-free. (Though in severe economic downturns, you can see defaults in even very high-rated bonds, leading to partial or complete loss of value however, this is statistically quite rare). You can make this investment through a debt mutual fund but please make sure that you read through the offer document carefully to understand the investment style of the mutual fund and their expense ratio (which directly affect your returns). In any case, it is always recommended to reach out to an investment adviser who is good with local tax laws to minimize taxes and maximize returns. "First of all, congratulations on being in an incredible financial position.  you have done well. So let's look at the investment side first.   If you put 400,000 in a decent index fund at an average 8% growth, and add 75,000 every year, in 10 years you'll have about $1.95 Million, $800k of which is capital gain (more or less due to market risk, of course) - or $560k after 30% tax.  If you instead put it in the whole life policy at 1.7% you'll have about $1.3 Million, $133k of which is tax-free capital gain. So the insurance is costing you $430K in opportunity cost, since you could have done something different with the money for more return.   The fund you mentioned (Vanguard Wellington) has a 10-year annualized growth of 7.13%.  At that growth rate, the opportunity cost is $350k.  Even with a portfolio with a more conservative 5% growth rate, the opportunity cost is $178k Now the life insurance.  Life insurance is a highly personal product, but I ran a quick quote for a 65-year old male in good health and got a premium of $11,000 per year for a $2M 10-year term policy.  So the same amount of term life insurance costs only $110,000.  Much less than the $430k in opportunity cost that the whole life would cost you. In addition, you have a mortgage that's costing you about $28K per year now (3.5% of 800,000). Why would you ""invest"" in a 1.7% insurance policy when you are paying a ""low"" 3.5% mortgage? I would take as much cash as you are comfortable with and pay down the mortgage as much as possible, and get it paid off quickly. Then you don't need life insurance.  Then you can do whatever you want.  Retire early, invest and give like crazy, travel the world, whatever.   I see no compelling reason to have life insurance at all, let alone life insurance wrapped in a bad investment vehicle." it depends on you, thats just the point, how risk averse you are determines how wide your risk premium needs to be to as you feel adequately compensate you for the risk you are taking. If I have some money i inherited from grandad and I want to make 15% on it then my required rate is 15% on top of the risk free rate. Thats what I require. Alternatively you could use a historic market rate to to determine the markets required return since on average that should be correct allowing you to sell your asset later to the average market participant. Thats easy for the equity investment. Because you have two different asset classes for your investments you could use different discount rates using the historic market risk premium in each asset's market or you can use the same discount rate for both which makes it easier to compare. In the second case I would discount using the equity required return since the equity investment you are not making is the opportunity cost of your real estate investment.   At the end of the day its a value judgment in my opinion and there isn't a right. Your understanding of the economics and from that what is important will inform what you use as a discount rate and that value judgment is kindha where an analyst adds value. I read it. It's fair. But just because Mr. Buffett says that's not true, doesn't mean he's right. As you can see, he still isn't backing up claims with numbers.  &gt;Most of the evidence suggests they are semi-strong form efficient.  But that's not even the case. It doesn't say markets are 100% efficient, it says they reflect all *available* information. Which they almost always tend to do, especially ensured with HFT.  I think if you look into statistical analysis you'll find the trend 99.99% of traders lack access to any special information, making the markets effectively 100% efficient. Gains/losses are proportional to the amount of risk taken.  &gt;Now you've made a promise you can't keep, because I'm not very wrong. :)  I was a dick, I apologize. I still believe it, however. Have an upvote for the welcomed conversation, though. edit: nevermind.  i glanced and thought you meant total market mutual funds.    For fixed income - if you want to get a good analysis of the bond market/interest rates, i would suggest you read some of bill gross' letters off the pimco site - a lot of discussion about our current zero bound interest rates.    For equities - I have the view that if the economy is doing well, people are less inclined to focus on dividend yield...thereby lowering the relative multiples on dividend/fcf yielding stocks.  So total return fund may be trading slightly cheaper. What is the question?  A total return fund seeks to just maximize total returns, as opposed to benchmark tracking, low vol, high vol, sectoral, whatever, this is just a name you gotta read the long prospectus to see how they are supposed to go about doing it.  Fixed income investing DOES NOT rely on on interest rates, it relies on the movements of interest rates (this is a key difference).  When economies are doing poorly, there is a flight to quality (everyone is scared and lends only to governments) driving government interest rate downs and increasing the spread between government rates and corporates.  My usual advice is There is never a good time to buy a mutual fund :P, better to buy an ETF or a portfolio of ETF's that correspond to your views.  You need to sit down and ask yourself what type of risk tolerances you're willing to take as mutual funds by construction deliver negative alpha due to fees.