4% Return (1 Viewer)

[djmich]

Investorguys, if you could get a guaranteed 4% annualized return over the next 5yrs vs putting your money elsewhere in the market...would you take that?  As part of an overall portfolio strategy would put a portion of your assets in that?

 

[Doctor Detroit]

There are a lot of variables when considering investment options. Most of the “guaranteed” investments lock you in for X amount of years and have heavy early withdrawal and divestment rules. 

There is always a place in a portfolio for lower risk instruments like CDs, government treasuries, and municipal bonds but a lot depends on your strategy, risk tolerance, and short and long term goals.

Since I don’t know what kind of investment you are talking about that’s about all I can offer. 

 

[Binky The Doormat]

Investorguys, if you could get a guaranteed 4% annualized return over the next 5yrs vs putting your money elsewhere in the market...would you take that?  As part of an overall portfolio strategy would put a portion of your assets in that?

if tax-free, it would be a definite yea.

 

[Johnny Rock]

No way. At my age, 49, I’m still 100% in stocks. High risk tolerance. Selfishly I wish stocks would drop for a decade+ then balloon!

 

[djmich]

There are a lot of variables when considering investment options. Most of the “guaranteed” investments lock you in for X amount of years and have heavy early withdrawal and divestment rules. 

There is always a place in a portfolio for lower risk instruments like CDs, government treasuries, and municipal bonds but a lot depends on your strategy, risk tolerance, and short and long term goals.

Since I don’t know what kind of investment you are talking about that’s about all I can offer. 

It’s a company non qualified deferred compensation plan.  So whichever investment choice I make, I can’t get the money for at least 5yrs.  One of the options is the company will grow the deferred comp 4% vs other market based benchmarks.

4% looks like crap compared to the last 8yrs and market history but figure could be a good part of diversified strategy.

 

[skycriesmary]

Yes, without question.

 

[Snickers]

My deferred comp plan at work is up about 18% YTD with a mix of stocks

 

[tommyboy]

It’s a company non qualified deferred compensation plan.  So whichever investment choice I make, I can’t get the money for at least 5yrs.  One of the options is the company will grow the deferred comp 4% vs other market based benchmarks.

4% looks like crap compared to the last 8yrs and market history but figure could be a good part of diversified strategy.

Do that in addition to all of your other savings. I do. It's just another, fairly safe, way to save money.

 

[Capella]

I'm at 23.5% this year. No chance. 

 

[NewlyRetired]

4% looks like crap compared to the last 8yrs and market history but figure could be a good part of diversified strategy.

no one in this thread can give you any solid yes or no, imo.

For starters we would need your age, your perspective retirement age, your current expenses, your goals for expenses in retirement, how much you have saved already, what your other investments are, what size of your investment pie would this investment take up, your yearly savings rate, whether you have kids and are considering college etc etc.

I am not asking for this level of personal info, but what I listed just scratches the surface of questions that need to be answered before you can get any good advice.  If you ever seek professional advice and they don't ask these plus many more in depth questions run and run fast.

Depending on your answers to these and other questions you might get a strong yes, a strong no, or anything in between.

 

[TheWalkmen]

I would, yes. The yield curve continues to flatten on its way to inversion, and inverted yield curves generally precede recessions. Also, introducing a risk free return to your portfolio reduces the range on the expected return.

 

[Sullie]

I'm with Johnny Rock, not at my age, I've got 15 or 20 years until retirement, I need one more big nosedive, all the people that panic to pull all their money out again so I can double or triple my money and then coast it out until it peaks.  If I were 65+ and retired then yes, I would be happy with 4% guaranteed I suppose. . . as long as it's not some guy running his ponzi scheme. . . errr I mean "investment brokerage" from his home.

 

[bigbottom]

Any chance your company goes bankrupt at some point?

 

[Statorama]

Investorguys, if you could get a guaranteed 4% annualized return over the next 5yrs vs putting your money elsewhere in the market...would you take that?  As part of an overall portfolio strategy would put a portion of your assets in that?

Better than putting it in a savings account

:HotTake:

 

[RokNRole]

How can any legal investment be guaranteed?

 

[RUSF18]

How can any legal investment be guaranteed?

You have a whole lot to learn.

Less than a decade ago online savings accounts were paying over 5%.

 

[Fat Nick]

Depends almost 100% on your risk profile and age.  I'm 38 - I wouldn't take 4% over 5 years vs. market returns.  Historical S&P returns are ~12%...much higher this year.  For me, I've got the time to wait out the ups and downs.  If I was 58 and about to retire, I'd take it.  But that's just me...

 

[pantherclub]

Investorguys, if you could get a guaranteed 4% annualized return over the next 5yrs vs putting your money elsewhere in the market...would you take that?  As part of an overall portfolio strategy would put a portion of your assets in that?

hell no

 

[guru_007]

Investorguys, if you could get a guaranteed 4% annualized return over the next 5yrs vs putting your money elsewhere in the market...would you take that?  As part of an overall portfolio strategy would put a portion of your assets in that?

Yes, I'd be happy putting 1/3 or so of my portfolio

This yield guaranteed over the next 5 years would propel the DJI to over 29,000.  Quite possible, sure but I'm good with being risk averse for 5 years for some of my money.

 

[Phil Elliott]

I believe many NQSPs may not be guaranteed if company files for bankruptcy. Do you have any investment options within the plan? Does the company match any contributions? How is it paid out? Do  you have an option on how it is paid out when you leave the company (lump sum, 3,5,10 years)? Is the 4% return guaranteed? Can you still participate in a 401k while contributing to NQSP? Lot more to think about besides 4%. As mentioned before, age, how long until you leave company/retirement, your investment tolerance, etc...?   

 

[djmich]

Any chance your company goes bankrupt at some point?

Small, particularly over a 5yr window, but need to acknowledge that risk will exist.

But that risk exists whether I choose the fixed return or a return that mirrors any index, fund etc.  

 

[djmich]

I believe many NQSPs may not be guaranteed if company files for bankruptcy. Do you have any investment options within the plan? Does the company match any contributions? How is it paid out? Do  you have an option on how it is paid out when you leave the company (lump sum, 3,5,10 years)? Is the 4% return guaranteed? Can you still participate in a 401k while contributing to NQSP? Lot more to think about besides 4%. As mentioned before, age, how long until you leave company/retirement, your investment tolerance, etc...?   

Yes, company bankruptcy risk does exist, although extremely limited with this company over a 5yr window.

There are other investment options, which basically mirror different funds including those "target XX date" retirement funds.

Once I contribute for this year I am locked in for this years contribution for 5yrs.  I can choose payout in lump sum or over time (up to 10yrs) once payment begins in 5yrs.  At any time over the next 4yrs I can change the timing (push back only) and payout schedule of the plan.

Overall my investment tolerance I'd say is moderate, but this would only be one portion of my overall portfolio (assume <15%).  I'm 45yrs old

 

[hooter311]

Plenty of A rated Mutual Life companies out there offering ~4%. Internal growth is tax free.  Borrow against the policy as a loan to access funds.

 

[bigbottom]

Small, particularly over a 5yr window, but need to acknowledge that risk will exist.

But that risk exists whether I choose the fixed return or a return that mirrors any index, fund etc.  

Sounds good.  I only ask because I live in Houston and I know a number of people who lost all their deferred comp when Enron went belly up.

 

[djmich]

Sounds good.  I only ask because I live in Houston and I know a number of people who lost all their deferred comp when Enron went belly up.

Yep...slim, but big if it occurs.