A.I.M. Users Bulletin Board

[Toofuzzy]

Hi Conrad

What would the return be if lets say you started with $20,000 and ended up after two years with $22,898 with dividends and interest (on the cash) this way

$20,000 x 1.07 (year one) x 1.07 (year two) = $22,898

I would call the above an average 7% return I think this is fair.

But if you take the gain $2,898 / by the 2 years= $1449 then divide the $1449 / $20,000 = 7.245%

which is a higher return which only gets higher if done over a greater number of years. I don't feel this is a fair way of looking at returns.

Toofuzzy