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True Investment Returns

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Anonymous

14y ago
Updated: 9/16/2019

The true investor knows the difference between an accounting and an economic return, and the only return that you should be worried about is the economic return, especially with fixed investments.

An accounting return does not take into account inflation. An economic return does take that into account.

Inflation is very real when it comes to buying power. $50,000 could buy a nice house in any part of the nation in 1980. Now it could buy maybe half as much real estate, and none along more expensive parts like the Coastlines.

If an advisor says to you that X% is the return, ask if that is an accounting return, and what inflation is expected to be over the life of the investment.

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14y ago

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