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Calculating the simple average rate of return on any given investment can be confusing and even misleading when trying to understand the growth or lack of growth in your investments.
Watch this short video to learn a more accurate way to calculate the average rate of return through clear and realistic examples. By better understanding your investment performance, you'll be able to make more informed investment decisions!
00:02 Introduction to misleading investment returns
00:11 Five scenarios of 20% average returns
00:45 Scenario 2: 40% and 0% returns
01:00 Scenario 3: 60% and -20% returns
01:17 Scenario 4: 100% and -60% returns
01:28 Scenario 5: Las Vegas example
01:50 Real-world ending balances comparison
02:13 Better methods for calculating returns
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