I've found an excellent spreadsheet for back testing developed by several folks on this forum. This spreadsheet calculates the nominal and real CAGR & std dev.
I've 2 basic questions:
1) Is CAGR the same as mean (average) rate of return? Can CAGR be used as mean in: NORM.INV(RAND(),MEAN,STD DEV)) in Excel? If not, is there a way to convert CAGR to mean?
2) Expenses would be increased based on some inflation rates if the nominal rates of return are used. How about if I use the "real" rate of returns? Would the expenses remain constant at the present values for 20-30 years while the portfolios go up based on the real rate of return?
Thanks in advance for your help!
I've 2 basic questions:
1) Is CAGR the same as mean (average) rate of return? Can CAGR be used as mean in: NORM.INV(RAND(),MEAN,STD DEV)) in Excel? If not, is there a way to convert CAGR to mean?
2) Expenses would be increased based on some inflation rates if the nominal rates of return are used. How about if I use the "real" rate of returns? Would the expenses remain constant at the present values for 20-30 years while the portfolios go up based on the real rate of return?
Thanks in advance for your help!
Statistics: Posted by Cincy_1988 — Thu Jan 23, 2025 8:05 pm — Replies 0 — Views 27
