What Is the Average Stock Market Return
Most Americans probably don’t think about the stock market a lot. With about half of Americans saying they couldn’t afford a $1,000 unexpected expense, it may seem that stock market returns are a “rich person problem” or that a bad year in the stock market only hurts the elites. However, many Americans are strongly impacted by stock market returns. Many Americans only retirement plans exist as 401(k)’s which are tied to the market performance. Furthermore, when the stock market crashes, wealth disappears leading to less spending and investment that can result in a recession or a more difficult job market. Understanding how the stock market performs can help you better plan for retirement and understand many other aspects of the economy.
The shorter your timeframe, the greater the market volatility investors will face. Daily, prices can gyrate wildly with 24-hour financial news chatter you should ignore. Many of the talking heads react to minute updates that often sensationalize blips in the stock markets from arcane and sometimes meaningless information and create anxiety, or worse, mania.
~Robyn, A Dime Saved
If you have heard anything about average stock market returns, you’ve probably heard that they return about 10% on average each year. But where did this number come from and is it accurate. This article by A Dime Saved helps break down the math behind this number and whether it is an accurate assumption. The 10% average annual return specifically refers to the S&P 500, which is an index calculated from the 500 largest publicly traded companies, weighted for the size of the company. Furthermore, the 10% number is not an arithmetic average of the past performance, but is instead a “compound average growth rate”, which better describes how your initial investment performed over time. It is also important to note that this number assumes you are reinvesting your dividends. Finally, it is worth noting that the 10% number does not account for inflation. So your “real” returns, or the spending power of your returns is less than 10% per year (probably in the 7-8% per year depending on which time window you look at). The article goes into much more detail and has great links to other calculators that can be helpful as well if this brief overview got you excited.
Dumpster Diving for Money: Woman Makes $30,000 From Trash at These 11 Stores
Everyone could use a few extra dollars nowadays. And with the job market being especially tight, people are finding creative ways to make money. There are plenty of articles about side hustles like DoorDash and driving Uber, but have you ever thought about selling literal garbage? While many people pay to have their garbage collected, this article is about someone who turned a liability (trash) into an asset (cash).
The Court ruled that trash left out for collection is no longer protected by a reasonable expectation of privacy under the Fourth Amendment, meaning police generally don’t need a warrant to search it.
~Saeed Darabi, Money Pantry
Saeed Darabi highlights the story of a woman who made $30,000 selling garbage. No, she wasn’t selling banana peels and McDonald’s wrappers. Instead, she would examine dumpsters outside of retailers and find unopened merchandise that was thrown away because it couldn’t be sold. She then would resell these items on secondhand marketplaces like eBay or Poshmark. Darabi ranks different stores for the potential resale value of the dumpster finds. While grocery stores are more likely than other stores to throw away product, a lot of grocery store finds aren’t resellable. (Who is going to buy expired lettuce on eBay?) Instead, Darabi states that stores like Bath and Body Works or other beauty stores often will have to throw away beauty products in sealed packaging that can sometimes fetch good prices on the secondary market. While it is not illegal to dive in dumpsters, Darabi warns that you should be mindful of trespassing laws and stores may ask you to stop examining their trash. But if you’re looking for an usual hobby that could earn a few extra dollars, it might be worth reading this article and giving it a try for yourself.
I did not plan for retirement and feel like a failure
When you look at your peers, it’s easy to assume they have it all figured out. You might see them driving a luxury SUV or a brand new pickup truck and assume that they’re doing well financially. However, these external looks can be deceiving. Maybe that new vehicle was financed with a negative equity and a sky high interest rate? When it comes to retirement savings, it’s even harder to tell where you stand compared to your peers. We all know we “should” save for retirement, and if you haven’t started saving yet you might feel embarrassed. It might comfort you to know that almost 50% of Americans have nothing saved for retirement.
Don’t lose heart. With some adjustments in your calculations, lifestyle and plans, you can make it work. It won’t be easy, but then what is?! Forget the past and act now!
~Dr M. Pattabiraman, FreeFincal
This article on Freefincal highlights a letter from a reader who feels like a failure because they haven’t saved anything for retirement and are approaching the age of 50. They ask the experts whether their case is hopeless and what advice they’d given someone in their situation. The experts respond with some really great advice on what to do if you end up at this age with nothing saved for retirement. (And it doesn’t start with building a time machine or chastising the reader for not starting earlier.) Practically speaking, if you reach the age of 50 with no retirement benefits, you are going to have to work longer (in some capacity) than someone who has well-stocked retirement accounts. So the number one piece of advice for the reader was to stay healthy and be proactive about taking care of their body and their mental health. Beyond prioritizing health to extend their career, the authors also recommend at looking at their expenses to see if they can find a way to pull back on some spending and build up some cushion for retirement. The experts also have several other actionable tips that can help this reader build resilience as they head into their sixth decade. If you feel behind in your retirement savings, it is worth checking out this article so you can work towards a more sustainable future.