4 ms·
> Punch in December 2000 for start and today's date for end. You'll get 398% total return. 398/21 = 19% annual return. I don't think you understand how percent
by kccqzy 5y ago
> Punch in December 2000 for start and today's date for end. You'll get 398% total return. 398/21 = 19% annual return.
I don't think you understand how percentages work. 19% annual return means on average every year you get 19% of the amount you have at the beginning of the year, not 19% of the amount when you began investing in December 2000.
If the 21-year return is 398%, the correct annualized return is pow(1+3.98,1/21)-1 which is 7.9%.
- drocer88 5y agoThanks for the clarification. Mea culpa. That 19% seemed too high. Note the spreadsheet from Professor Damadoaran : http://www.stern.nyu.edu/~adamodar/pc/datasets/histretSP.xls http://www.stern.nyu.edu/~adamodar/pc/datasets/histretSP.xls The years 2001-2020 inclusive S&P 500 arithmetic average inflation adjusted total return is 6.79% ( =average(o92:o111) ). Which is below the 1928-2020 average return of 8.5%. Inflation might be underestimated. 6.7 is a lot closer to your calculation!