{"id":35487,"date":"2025-03-22T23:56:00","date_gmt":"2025-03-22T15:56:00","guid":{"rendered":"https:\/\/www.granitefirm.com\/blog\/us\/?p=35487"},"modified":"2025-11-19T10:43:53","modified_gmt":"2025-11-19T02:43:53","slug":"investment-return-numbers","status":"publish","type":"post","link":"https:\/\/www.granitefirm.com\/blog\/us\/2025\/03\/22\/investment-return-numbers\/","title":{"rendered":"Investment Return, be careful of the numbers pitfall"},"content":{"rendered":"\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #ffffff;color:#ffffff\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #ffffff;color:#ffffff\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2025\/03\/22\/investment-return-numbers\/#Two_examples_of_investment_return\" >Two examples of investment return<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2025\/03\/22\/investment-return-numbers\/#Fund_company_tactics\" >Fund company tactics<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2025\/03\/22\/investment-return-numbers\/#Related_articles\" >Related articles<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Two_examples_of_investment_return\"><\/span>Two examples of investment return<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2025\/02\/20\/statistics-can-be-deceiving\/\">Statistics can be deceiving<\/a>&#8220;,  I have two examples here. I saw a new book in a bookstore. It was published by a university finance scholar in Taiwan who works as a consultant for a government fund. The book cover emphasizes that this financial scholar invested in a market value ETF for 20 years and achieved an &#8220;amazing rate of return&#8221; of 5 times.<\/p>\n\n\n\n<p>A friend of mine who is the same age of me, boasted at a gathering of mutual friends that he started investing in US stocks in 1995 and has made about five times the return so far. This immediately caused a commotion among the friends at the table, and there was a constant stream of admiration and praise.<\/p>\n\n\n\n<p>Both of these examples make the same mistake I wrote in &#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2021\/07\/10\/sustained-investor\/\" target=\"_blank\" rel=\"noreferrer noopener\">An investor success can be sustained or not? how to verify?<\/a>&#8221; and &#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2025\/01\/25\/checklist-investment-return\/\">Checklist to see if your return on investment is good or not?<\/a>&#8220;:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>What is mentioned is the total rate of return, a five-fold return. For general public, a five-fold return is of course very good. However, everyone forgets how long the investment period is. The annual rate of return (please use the &#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2022\/07\/25\/stock-worth-holding-forever\/\" target=\"_blank\" rel=\"noreferrer noopener\">Investors should care annualized rate of return (IRR), How to calculate?<\/a>&#8220;) is the only reference standard.<\/li>\n\n\n\n<li>In the first example, after investing for 20 years, a total return of 5 times was obtained; the annualized rate of return during the investment period was only 8.36%. The annualized rate of return of the <a href=\"https:\/\/en.wikipedia.org\/wiki\/TAIEX\" target=\"_blank\" rel=\"noopener\">Taiwan Weighted Index<\/a> (please use the &#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2022\/09\/15\/taiwan-stock-exchange\/\" target=\"_blank\" rel=\"noreferrer noopener\">Querier to Annualized rate of return for Taiwan Stock Exchange<\/a>&#8221; for query) in the past 30 years excluding dividends is 8.25%!<\/li>\n\n\n\n<li>In the second example, after investing for 29 years, a total return of 5 times was obtained; the annualized rate of return during the investment period was only 5.71%. The annualized rate of return of the S&amp;P 500 Index of US stocks over the past 30 years (please use the&#8221;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2022\/09\/11\/sp-500-index-querier\/\" target=\"_blank\" rel=\"noreferrer noopener\">Querier to Annualized rate of return for S&amp;P 500 Index<\/a>&#8221; for query) excluding dividends is 8.12%!<\/li>\n<\/ul>\n\n\n\n<p>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2025\/02\/20\/statistics-can-be-deceiving\/\">Statistics can be deceiving<\/a>&#8220;, Do you still think that the above two examples of seemingly making a lot of money have good returns on investment?<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Fund_company_tactics\"><\/span>Fund company tactics<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Mutual funds or financial management companies love to brag about how good their fund returns are in order to attract uninformed investors. The methods they most often use are:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>We only talk about the rate of return, not three, five, ten, or twenty years. If it is not the rate of return for more than ten consecutive years, it has no reference value at all.<\/li>\n\n\n\n<li>Is it the rate of return for those consecutive years? Should we omit the periods in between or before and after when the returns are poor?<\/li>\n\n\n\n<li>Are other mutual funds with better or worse returns deliberately combined or split out during the period of return cited to improve the numbers?<\/li>\n<\/ul>\n\n\n\n<p>Now you know why the rate of return figures proposed by mutual fund companies look so attractive?<\/p>\n\n\n\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"180\" height=\"90\" src=\"https:\/\/www.granitefirm.com\/blog\/us\/wp-content\/uploads\/sites\/2\/2025\/03\/return_rate-Custom.jpg\" alt=\"Investment Return\" class=\"wp-image-35488\"\/><figcaption class=\"wp-element-caption\">credit:Gemini<\/figcaption><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"block-d8a344e9-4edc-4dc1-b981-40aa61d258b5\"><span class=\"ez-toc-section\" id=\"Related_articles\"><\/span>Related articles<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2025\/05\/29\/turn-to-passive-investment\/\">Investors turn to passive investment funds ETF and abandoning active investment funds<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2025\/03\/22\/investment-return-numbers\/\">Investment Return, be careful of the numbers pitfall<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2021\/07\/10\/sustained-investor\/\" target=\"_blank\" rel=\"noreferrer noopener\">An investor success can be sustained or not? how to verify?<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2025\/01\/25\/checklist-investment-return\/\">Checklist to see if your return on investment is good or not?<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2023\/07\/10\/fund-size-and-roi\/\" target=\"_blank\" rel=\"noreferrer noopener\">The correlation between fund size and return on investment<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2022\/01\/06\/any-reason-to-buy-mutual-fund\/\" target=\"_blank\" rel=\"noreferrer noopener\">Any strong reason to buy mutual fund?<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2023\/03\/10\/stock-funds-perform-poorly\/\">Why do stock funds perform so poorly? How bad is it?<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2025\/01\/07\/return-on-investment\/\">The larger the portfolio, the lower the return on investment will possibly be over decads<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2022\/08\/30\/irr-calculator\/\" target=\"_blank\" rel=\"noreferrer noopener\">IRR Calculator<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2022\/09\/11\/sp-500-index-querier\/\" target=\"_blank\" rel=\"noreferrer noopener\">Querier to Annualized rate of return for S&amp;P 500 Index<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2022\/09\/15\/taiwan-stock-exchange\/\" target=\"_blank\" rel=\"noreferrer noopener\">Querier to Annualized rate of return for Taiwan Stock Exchange<\/a>&#8220;<\/li>\n\n\n\n<li> &#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2022\/07\/25\/stock-worth-holding-forever\/\" target=\"_blank\" rel=\"noreferrer noopener\">Investors should care annualized rate of return (IRR), How to calculate?<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2025\/02\/20\/statistics-can-be-deceiving\/\">Statistics can be deceiving<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2022\/05\/27\/outliers-10000-hours\/\">Outliers &#8211; great finding on 10000 hours<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2025\/11\/18\/doom-to-fail-if-not-good-at\/\">Doom to fail if you&#8217;re not good at investing<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2021\/07\/10\/sustained-investor\/\" target=\"_blank\" rel=\"noreferrer noopener\">An investor success can be sustained or not? how to verify?<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2025\/01\/25\/checklist-investment-return\/\">Checklist to see if your return on investment is good or not?<\/a><\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2021\/12\/04\/u-should-invest-etfs\/\" target=\"_blank\" rel=\"noreferrer noopener\">Why most investors should invest ETFs tracking broad market?<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2023\/11\/17\/global-stock-markets\/\">Global stock markets performance comparision over the past 30 years in a table<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2022\/07\/25\/stock-worth-holding-forever\/\" target=\"_blank\" rel=\"noreferrer noopener\">S&amp;P 500 index, the only stock worth holding forever<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2023\/10\/16\/long-term-investors\/\" target=\"_blank\" rel=\"noreferrer noopener\">Stocks are the best bet for long-term investors<\/a>&#8220;<\/li>\n<\/ul>\n\n\n\n<p><em><strong>Disclaimer<\/strong><\/em><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><em>The content of this site is the author\u2019s personal opinions and is for reference only. I am not responsible for the correctness, opinions, and immediacy of the content and information of the article. Readers must make their own judgments.<\/em><\/li>\n\n\n\n<li><em>I shall not be liable for any damages or other legal liabilities for the direct or indirect losses caused by the readers&#8217; direct or indirect reliance on and reference to the information on this site, or all the responsibilities arising therefrom, as a result of any investment behavior.<\/em><\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>A five-fold investment return is certainly good. But you forgets how long the investment period is, and the IRR is the only reference standard. Funds or financial management companies love to brag about how good their fund returns are in order to attract uninformed investors.<\/p>\n","protected":false},"author":1,"featured_media":35488,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1412,1424],"tags":[],"class_list":["post-35487","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-investment-return","category-historical-statistic"],"_links":{"self":[{"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/posts\/35487","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/comments?post=35487"}],"version-history":[{"count":16,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/posts\/35487\/revisions"}],"predecessor-version":[{"id":40088,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/posts\/35487\/revisions\/40088"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/media\/35488"}],"wp:attachment":[{"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/media?parent=35487"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/categories?post=35487"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/tags?post=35487"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}