Page 61 - Ready Set Retire
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Ready. Set. Retire!
gain, even though the average rate of return is zero, the real
rate of return is something else.
+10% - 10% = 0.
It follows that if you have negative returns in the market, you
must have even higher gains to make up for it. The following
chart shows just how much in gains you must have to make up
for losses.
Figure 6: Gains needed to replace market losses.
Removing risk is much more important than increasing gains.
The following graph shows the Dow from 1929 to the end of
2012. The average rate of return during this period was 6.72%
(not including dividends).
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