Normal
It doesn't matter. The assumption used was average return over the 40 year period. It's (or should be) derived from the beginning and the end point, not through adding or multiply sequential periodic performance.To illustrate.... the relevant index at year 0 was 250 points and at year 40 is 2500. The nominal CAGR would be 5.925%. The actual profile of the index would be completely different. It would certainly include many negative years, but the average growth rate will get you to the same end point.The bigger concern is whether a period of major drawdown would throw people out of their long term plan.
It doesn't matter. The assumption used was average return over the 40 year period. It's (or should be) derived from the beginning and the end point, not through adding or multiply sequential periodic performance.
To illustrate.... the relevant index at year 0 was 250 points and at year 40 is 2500. The nominal CAGR would be 5.925%. The actual profile of the index would be completely different. It would certainly include many negative years, but the average growth rate will get you to the same end point.
The bigger concern is whether a period of major drawdown would throw people out of their long term plan.
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