Category — Managing Money

I went to a fund raising event with my other half and some friends recently. While we are not loaded rich to give money out simply, it was a cause that we believed in and wanted to support this non profit organization.

So we bought tickets for the dinner, which by my standards are for the well heeled to say the least. It was a new experience for us. The event was attended by some VIPs (perhaps 10 to 20 percent of the crowd). How I knew? There was only a few of them bidding during the auction.

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If you have been investing for any period of time, I’m sure you would noticed that the average return of any fund does not usually equal your average return . Why is that so?

For your information, the average return of a fund is taken from the begining of a period (usually the 1 Jan) to the end of the period (usually 31 Dec). This assume no further buying or selling during the period. Investor returns on the other hand are your real life returns that you actually receive.

See the diagram below. Even though the fund below gave say 10% return for the year (from Jan to Dec), it would have been very different if you invested at Point 1 vs Point 2.

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