Consider a simple case of $1000 deposited yearly and
earning pre-tax rate of return of 10%, inflation rate is
3%. In Jan 2005, $1000 deposited and the Yearly Snapshot
shows the total amount (priciple+gains, including
inflation) is $1050.
Shouldn't it be $1100? Why the gain is 5% instead of 10%?
In coming year 2006, again the total amount is $2205
(1050+1000+(1050x10% + 1000x5%)).
Shouldn't it be $2310 (1100+1000+(2100x10%))?
Not to mention if I checked the including inflation
option, the value becomes more bizzare.
I hope someone can explain it to me as I have to have
confidence on how does money calculate the returns before
I can plan for realistic retirement. Thanks.