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What does average annual return really mean?

Contributed by 1stMill | July 23, 2005 08:35 AM PST

When a mutual fund claims an average annual return of ___% per year over the last ___ years, or you see the phrase compound annual growth rate (CAGR), do you know what these terms really mean?

In an earlier post, I noted that -- over the last 12 years -- the value of my portfolio has averaged a compounded annual growth rate of 10.17%. Before making this statement, I used the web to validate my terminology / math calculation. Here's what I found...

Click here to visit Motley Fools site for a detailed description of how Compound Annual Growth Rate (or return) is calculated.

Also read: My Net Worth Growth, Part 1: Introduction...

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Read More ... All Other Posts In The Same Category

09/17/05 | Step 5: Find more funds like D&C Balanced | (14)
08/22/05 | How do you keep daily tabs on your stocks & mutual funds? | (6)
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