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How do I figure the math to determine the overall rate of return for the past 20 years with my Deffered Comp(457), if the increase in investment value has been $16000 for instance? Not counting the contributions of course.
Just so everyone follows along: When trying to figure out your average returns you cant just divide the gains by the number of years because the order the gains are in make a big difference.
If as an example you start with 100 bucks and fall 40% the first year and rise 80% the next year so you have 108 dollars.
Taking -40 and +80 =40% gain divided by 2 years =20% a year gain which is wrong when you just take the gains and divide by the years, your really only up 8% divided by 2 years or 4% a year.
So the formula to figure this is quite a bit more complex then just simply divide gains and years.,..
the order of the gains determines your return not the number of years divided by the amount..
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