An Investment Average of 10% won’t Guarantee Success
I saw a great advertisment released by my office’s parent company today; I have never released what my office’s parent company is…and I am not about to start now! Notwithstanding my obsession with privacy, I couldn’t get over this info and felt like I should share.
Each portfolio has an overage return of 10%, a withdrawal of $30,000 fixed at 3% inflation, and starts with $500,000…yet the first portfolio leaves the person with a little over $19,000 while the second portfolio leaves a person with over $2,500,000!
Portfolio 1 Portfolio 2
| Year | Investment Return | Withdrawal | Account Balance | Year | Investment Return | Withdrawal | Account Balance | |
| 1 | -8.4% | $30,000 | $427,900 | 1 | 1.3% | $30,000 | $476,600 | |
| 2 | 4.0% | $30,900 | 414,030 | 2 | 10.1% | 30,900 | 493,646 | |
| 3 | 14.3% | $31,827 | 441,410 | 3 | 7.6% | 31,827 | 499,385 | |
| 4 | 19.0% | $32,782 | 492,275 | 4 | 30.4% | 32,782 | 618,417 | |
| 5 | -14.8% | $33,765 | 385,752 | 5 | -3.1% | 33,765 | 565,419 | |
| 6 | -26.5% | $34,778 | 248,942 | 6 | 31.5% | 34,778 | 708,917 | |
| 7 | 37.3% | $35,822 | 305,976 | 7 | 16.8% | 35,822 | 792,335 | |
| 8 | 23.7% | $36,896 | 341,596 | 8 | 5.2% | 36,896 | 796,799 | |
| 9 | -7.3% | $38,003 | 278,793 | 9 | 18.6% | 38,003 | 906,602 | |
| 10 | 6.6% | $39,143 | 257,966 | 10 | 32.0% | 39,143 | 1,157,884 | |
| 11 | 18.6% | $40,317 | 265,631 | 11 | 6.1% | 40,317 | 1,188,270 | |
| 12 | 32.1% | $41,527 | 309,451 | 12 | 22.4% | 41,527 | 1,412,559 | |
| 13 | -4.9% | $42,773 | 251,484 | 13 | 21.1% | 42,773 | 1,667,978 | |
| 14 | 21.1% | $44,056 | 260,516 | 14 | -4.9% | 44,056 | 1,542,024 | |
| 15 | 22.4% | $45,378 | 273,416 | 15 | 32.1% | 45,378 | 1,992,099 | |
| 16 | 6.1% | $46,739 | 243,383 | 16 | 18.6% | 46,739 | 2,315,890 | |
| 17 | 32.0% | $48,141 | 273,197 | 17 | 6.6% | 48,141 | 2,419,903 | |
| 18 | 18.6% | $49,585 | 274,290 | 18 | -7.3% | 49,585 | 2,194,633 | |
| 19 | 5.2% | $51,073 | 273,535 | 19 | 23.7% | 51,073 | 2,663,688 | |
| 20 | 16.8% | $52,605 | 224,883 | 20 | 37.3% | 52,605 | 3,604,638 | |
| 21 | 31.5% | $54,183 | 241,605 | 21 | -26.5% | 54,183 | 2,597,028 | |
| 22 | -3.1% | $55,809 | 178,282 | 22 | -14.8% | 55,809 | 2,157,378 | |
| 23 | 30.4% | $57,483 | 174,997 | 23 | 19.0% | 57,483 | 2,508,718 | |
| 24 | 7.6% | $59,208 | 129,107 | 24 | 14.3% | 59,208 | 2,808,257 | |
| 25 | 10.1% | $60,984 | 81,111 | 25 | 4.0% | 60,984 | 2,859,042 | |
| 26 | 1.3% | $62,813 | 19,369 | 26 | -8.4% | 62,813 | 2,555,498 |
2 Questions for the analytics out there:
- What product do you think my company is trying to sell? hint – I have never sold this product, nor do I own one…
- What is the correlation between Portfolio 1 and Portfolio 2? hint – both portfolios represent the same time period
I need guesses!
