What is a good personal rate of return?

Question

On a 401K plan?

I have a mix in my account. I'm only 36 so have a while to retire. Right now it's showing one rate of return for the whole account of 18.2%

Answer 1

18% in one year? That's really good.

Keep in mind we're talking just one year, and we haven't begun to factor in losses from time to time cutting into that rate of return.

Over a long period of time your rate of return for the typical balanced fund should settle around the historical 6-8% return.

Considering it's the end of the year and about time to think about taxes, now would be a good time to evaluate your portfolio and figure out a good way to lock in some of those gains in your retirement portfolio, which includes your 401k.

I would rebalance my portfolio so that some of my gains are transferred over into underperforming parts of my account, as well as consider whether those underperformers still provide balance in your overall investment strategy. Just because some portion lost money doesn't mean that, one day, they won't provide support when those high-flyers take a hit.

I'm no professional, so my experience is all personal. But I can at least say I pay enough attention to my investments w/o being obcessed by it. And they've been doing pretty nicely, even through the rough spots a few years ago.

Answer 2

It would depend on your asset mix and how long until you plan to retire. Historical averages are around 8% for Bonds and 12% for stocks.