Page 17 - Exposed Final

Average rates of return are simply adding the positive numbers, then

subtracting the negative numbers, and dividing by the amount of years. The

problem arises when you have to factor in a negative number; you have to

make up the loss first, which reduces the return. Remember a 50% loss

requires a 100% return to break-even. The actual return and the average

return will NEVER be the same if you have to factor in a negative number.

In addition, the people of Wall Street do not work for free. If we add a

modest 1% annual fee, your balance is $589,023. Now you know why Wall

Street wants you to invest for the long term. They can charge you fees, but

you take all the risk. Nice deal -- for them. Now your actual rate of return is

6.6%.

Average rates of return can lead you into financial disaster if you are not

careful. What happened to your $1,000,000? Looks like almost a 50%

mistake to me. The only problem is that you are 20 years older and in deep

trouble!