A few weeks ago, I was invited to teach an introduction to personal finance class to a group of local 8th graders. Two of the concepts we covered were compounding and why you need to have a real return (return above inflation). During the class, we reviewed charts of investment returns since 1926 and the […]
Understanding Rates of Return
Will Rogers once quipped: “It is not the return on my investment that I am concerned about; it’s the return of my investment.” In all seriousness though, calculating a rate of return; also known as “return on investment”, or ROI, is useful because it allows investors to compare various investments, regardless of the amount invested […]
The Risk Illusion
As emotional beings, we are susceptible to illusions and phobias. Never mind that the snake under the bed turned out to be a sock, or that the monster in the closet was a hat and overcoat. At times our irrational fears seem so real that no amount of reason can calm us. At the same […]