Re: Average yearly return
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So if we let X being the starting amount, Y be the ending amount, Z be the average yearly return, and N be the number of years, then the calculation would be the following?
Z = (Y/X)^1/N - 1
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If you are using the levels of stock indexes (i.e. the Dow) to estimate long term market returns, you also need to include dividends. Back in the fifties dividends added as much as 4% a year to the index.
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