Why The ‘Average’ Stock Market Return Doesn’t Work
When you’re calculating the average stock market return, percentage returns aren’t reliable.Example: you have invested $1,000 in the stock market.Your first year, you lose 30% of your initial value. That hurts. You now have $700 in the stock market.Luckily, in your second year, you gain 30%.YEAHH, that means I’m back on track for the $1,000 right?Well, almost. $700 + 30% return = $910.
Even when we look at the average stock market returns over a period of 10 years, there is no real average that we can point out.Volatility is very real in the stock market, and you can see that in the table.