No. of Recommendations: 2
Sheople asks "What simple thing am I missing?"

I think part of the issue is that one of the inputs is Average Annual Return. In a perfect world the answer to your question is as follows. When you entered the data in '07 you may have used a figure like 9% for average annual return. In the interim the market has crashed and lost 30% of its value. In light of this drop, one might (I know this is a big assumption) now say that market is poised to deliver 11% annual returns because we are starting at a lower valuation. Taking your now smaller sum of money and entering a higher annual rate of return should give you roughly the same amount at the end.

Obviously, when you enter a number for average annual return, you realize that the market will not return 8 or 9% each and every year. Some years it will return 20% other years it will be down 15%. You happened to begin the process of longterm buy and hold the year that the market lost 30%. Therefore, if you truly believed your initial input for average annual returns, you must recalculate it slightly higher going forward to reflect that the first year had a large negative return.

Now this is the theory; but whether or not our current financial crisis has permanently changed the rules of the game, only time will tell.
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