Still Growing - they are quoting the returns AFTER TEN YEARS, not return per annum.
That is, say you invested £1000 in 1970, you ended up with £1050 in 1979, which equates to a growth of 0.48% per annum, which is pitiful, it didn't even keep up with inflation. But most mortgage payments are at least 4% per annum - so to break even, your investment needs to return 48% after ten years - that you need £1000 invested to be worth £1480 after ten years.
Get it? The calculation is (1.04)^10 to work out what an annual return of 4% compounds to after ten years.
There have only been five decades where the DOW return exceeded 4% per annum. The last decade we've lived in certainly hasn't been one of them, and I'm not sure the next one will be either.
Be careful when you invest. Read Benjamin Granham's book. It might be worth brushing up on basics of how compounding works and how to work out what the per annum equivalent is of returns quoted over longer periods.
|