Question
Nelson has accumulated $168,000 in his retirement account. He is 65 years old and plans to retire this fall. He's trying to determine how much
Nelson has accumulated $168,000 in his retirement account. He is 65 years old and plans to retire this fall. He's trying to determine how much income he will have to live on during his retirement years. Nelson is a relatively conservative investor and has decided that he wants to keep his retirement funds invested 60 percent in long-term corporate bonds and 40 percent in stocks. He is estimating that he will earn an average annual rate of return of 12 percent. Is Nelson's expected rate of return reasonable given the historical record from 1926-2015? Justify your response.
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