Category — Managing Money

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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A tipping point is where “momentum for change becomes unstoppable” according to Malcolm Gladwell, who wrote a book titled “The Tipping Point: How Little Things Can Make a Big Difference”.

Just 2 weeks ago, my sis got herself a new car and I got myself a new mobile phone. She has been putting off getting the car and I have been putting off getting the phone. For me it was a small thing. I just wanted my last phone to make it to 3 full years of use before relegating it to the junk bin. For my sis, buying a new car mean a small chunk of money down plus many months to pay off the loan.

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