Menu

Updated

Are projected return assumptions arithmetic means or geometric means?

Projected return assumptions are in geometric means.

They represent median projected returns, instead of average projected returns. The median return represents what one would be projected to obtain at least 50% of the time, whereas an arithmetic average would be projected to occur less than 50% of the time. Wealthfront chooses to use the geometric mean because it is the more conservative method.

For more details on our methodology, please log into your account and review the Path disclosures.

Nothing in this blog should be construed as tax advice, a solicitation or offer, or recommendation, to buy or sell any security. Financial advisory services are only provided to investors who become Wealthfront Inc. clients pursuant to a written agreement, which investors are urged to read carefully, that is available at www.wealthfront.com. All securities involve risk and may result in some loss. For more information please visit www.wealthfront.com or see our Full Disclosure. While the data Wealthfront uses from third parties is believed to be reliable, Wealthfront does not guarantee the accuracy of the information.

Was this article helpful?