A common example is contributing too much to a Roth IRA based on your income level; the ability to contribute to a Roth IRA begins to phase out at higher income levels. Contribution limits decrease once your Modified Adjusted Gross Income (MAGI) rises above $105,000 for single filers and $167,000 for joint tax filers.
(A high rate of return, of course, will beat that, but you'll have to work for it.) Assume that inflation is an annual 3% and capital gains are 15%. If your target is a 15% return before inflation and taxes, you'll end up with 12.4% return. (If you pay 20% in capital gains taxes, you'll end up with 11.6% return.) A really good return on investment for an active investor is 15% annually. That's healthy.
Rates of Return. At the end of each fiscal year â June 30 â the ASRS calculates a rate of return on its investment portfolio. The assumed rate of return is 8 percent. The final rate of return is used in calculating contribution rates, determining if there are excess benefits to disperse to retirees and for calculating assets and liabilities of the plan. The ASRS total fund returns for the fiscal year ending June 30, 2015 are as follows: