The Motley Fool Discussion Boards

Previous Page

Investing/Strategies / Retirement Investing


Subject:  Re: Year End Results... Date:  1/6/2004  8:55 PM
Author:  TTRoberts Number:  38389 of 95571

JAFO31, writes:

<< Average when talking about stock returns typically does not mean arithmetical mean of yearly returns (11.33% -9.93% -10.3% +33.25%/4, in Ted's example).

Average when talking about stock returns typically means Compund Annual Growth Rate (CAGR), which is the "imaginary number that describes the rate at which an investment grew as though it had grown at a steady rate" of growth."

That's absolutely correct . . . and a point I suppose I should have made. That 3.55% I stated for over the last 4 years is the Average Annual Total Rate of Return (or GAGR if you will) as opposed to the average/mean of 5.84%. And as for the last two years, this 401(k) AATRR was 9.51%.

And the point I was trying to make clear still stands . . . just note JAFO's clarification about what "average return" is usually referring to.

. . . . thanks JAFO for making that point clear! :-)


Copyright 1996-2019 trademark and the "Fool" logo is a trademark of The Motley Fool, Inc. Contact Us