2. Throughout history, there have been remarkably few 30-year windows where the average annual return was LESS than 8%. Typically, the 30-yr rolling average return is north of 10%.
Average annual return isn't really a useful measure in this case, though; the compound annual growth rate is what you want. From 1926-2010 the compound annual growth rate of the S&P 500 was 9.89%.
The problem with average annual return is best illustrated by the example that if you invest $x, and your investment doubles in value the first year, you now have $2x, or a 100% return. But if your investment loses 50% the next year you're back down to $x. Your average annual return is 25%, which sounds great but what have you actually earned? Nothing.
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