Don't be fooled by average returns - it's compound returns that count!

A few clients this week have asked me if it’s a good idea to invest a large sum in the share market at the moment (for a variety of reasons e.g. as super contributions, a gearing strategy and so on). I told these clients that I have some real concerns with it – not because I don’t have faith in the stock market – but because of the difference between actual versus compound returns.As these charts demonstrate, the US and Australian stock markets are close to their peaks since the GFC hit nearl...