racemize Posted February 21, 2014 Share Posted February 21, 2014 I'm working on an essay showing how much an active investor has to beat the market by in order to achieve the same after tax returns, given various investment lengths, turnover rates, and annual returns. In order to properly model this, I have to account for the dividends that are taxed for index returns. I have a graph from 1870 showing the dividend yields for the S&P 500. As you can imagine, it is much higher at the beginning (e.g., 6% range) and bottoms at 1998 (~1%). Thus: 1) If you had to guess, what will be the new normal for S&P 500 yields? 3%? (talking about over the next 10-50 years) 2) If anyone can give an explanation on how indices avoid capital gains distributions (e.g, from removing/adding members), I'd appreciate it! Link to comment Share on other sites More sharing options...
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