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Author: 2giantsteps One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75530  
Subject: Re: Year End Results... Date: 1/6/2004 2:26 PM
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<<The portfolio in my wife's 401(k) got +32.25% for 2003, but the year before it was a –10.8%. Like you, over the last 2 years I have “averaged” in the realm of 10%+. But over the last 4 years the average has only been +5.84%. So you see, just what kind of “average” you might have really depends on what segment of time you carve out of a list of variable returns. And I might add, you need to be very careful about your thinking about “average” returns using constant rate thinking.

For example, this 401(k) “average” rate of return was 5.84% over the last 4 years (11.33% -9.93% -10.3% +33.25%/4). The actual return over that period calculates out to be 3.55%. But . . . if I had earned 5.84% EACH year instead of it being the variable return as shown, the 401(k) would have had 5.5% more in it today.>>

Thanks for sharing. I haven't kept track all that long. Again...I am new to this. I am still in the learning process and know that understanding personal finance is a work in progress. Maybe I'll sit down this weekend and look at my numbers for the last four years.

2gs
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