Realistic Rate of Return – Part 1
In producing the many excel spreadsheets that I have that tell me how much I need to save to in order to get x dollars x years down the road, I’m always kind of curious as to what I should put in there for my compound annual return rate. Certainly having a realistic and accurate return rate is vital to any kind of financial planning exercise. Especially seeing as how most of my calculations span 30 or more years of investment performance the return rate can drastically change the final numbers. If I were to set my expected return rate too high I would drastically over inflate my numbers and be poorly disappointed with my actual results.