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[quote=Anonymous][quote=Anonymous]Finance professor here. It is hard to pin down the average return because there is so much volatility. The compound return has been around 10% since 1926, but lower since 2000. Note that compound return is less than average return by around 2%. For example, if you invested $100, got a 44% return and then a 0% return, then your average return is 22%. But your compound return is only 20%, because you end up with $100*1.2*1.2 = $144. But the biggest factor is that inflation lowers your real return. In 10 years, consumer prices could double, and in 20 years they could quadruple. Yes, you might have $15 million, but that might buy less than $4 million worth of housing, transportation, and food at current prices.[/quote] NP. Thank you, PP. This is helpful![/quote]
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