Re: Someone check my math on CAGR and voice your opinion please? Thank you for readin
I use MoneyChimps 'CAGR of the Stock Market (Annualized Return)' to get those numbers - makes life much easier
You make a valid point - and, one that I surprisingly figured out in a post I did today. My post was actually about Investment Risk and the concerns I had about a few chaps reaching for the stars within a couple of years of retirement... Regretfully, I forgot to retitle it and the title carried over from a previous post. Oh well...
Anyway, your computations seem to be in the ballpark. The CAGR posted by MoneyChimp is 6.59% with dividends reinvested. However, if you look at the computation for CAGR, I'm not certain you got the equation correct. It is based on Standard Deviation - is that what your Geometric Mean computations are getting to? If so, then your final numbers lead you to your conclusion - but there is a but...
The Standard deviation of the two funds differ rather dramatically for that time period:
- C Fund: 17.77%
- S Fund: 21.02%
That means that a normal return for the 'C Fund' fell between -11.15% and +24.40%
While that of the 'S Fund' fell between -12.73 and 29.31
Hmm, that would still make the S Fund a very good option now that I am looking at it...
Personally, I'd mix in a little F and I fund to reduce that risk (standard deviation). My standard deviation is at about 9% rather than 18% or 21%...
Lookin' up at the 'G Fund'!!!
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