THE MAGIC (OR ILLUSION) OF AVERAGE RETURNS:

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They say that because they like to use these average returns as a predictor for prospective clients’ future returns. It’s what’s called their

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Let’s talk ?????? math vs. ???? math shall we?

This is how their magic average returns numbers work out in real life…

Let’s say Jack has $100,000 in the market…. COOL !

Jack loses 50% in year 1… NOT COOL !

In year 2 Jack gets 50% growth… COOL !

What was Jacks average return? ……….. 0%  which is NOT COOL!

How much money does Jack have now? $75,000… NOT COOL AT ALL!

So wait, Jack averaged 0% but is down 25%? How could that be?!?!

So why do so many investment guys use “average returns” when projecting future values of savings and retirement plans???

HERE’S WHY:

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Don’t get fooled by these average return promoting illusionists. Ask knowledgeable people questions. Get educated before you risk your hard earned money.