147 - How to Best Track Investment Returns

Real Personal Finance

Scott and James discuss how to best track investment returns.

Listener Question

Does it make sense to track my investments in my 401K and Roth IRA purely off of the projected rate of return that people suggest (typically between 7-10%) or should I track my investments based on the inflation-adjusted return rate? I am asking this as a 23 year old, who sees a million dollars as a very attainable goal with a Roth and/or 401K but when you factor in inflation each year at say 3% that million dollars seems more challenging to accomplish.

Should I track my portfolio values off of this “standard” 7-10% growth rate or should I take a more conservative approach and track them off of a (4-7%) growth rate so that I can have a better understanding of what I am on track for?

Planning Points Discussed

• Utilizing Time Efficiently
• Capital Appreciation
• Purchasing Power
• Other issues (IRAs, Inflation, Financial Goals, etc.)

Timestamps:

3:54 - Nominal v. Real Returns

6:37 - Investment Growth Example

9:35 - Inflation Protection

11:46 - Importance of Real Return

13:51 - Aligning Your Financial Goals

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