Have you run into some fund or investment vehicle where the seller advertises a tremendous growth rate?
Watch out, because you might be getting played for a sucker!
When you come in here, you look for the sucker. And if you can’t find him, then the sucker is you. –Mark Cuban, Shark Tank
Let’s imagine a very tiny index fund. It’s worth a measly $1. What is the total growth rate if it climbs to $2? 100%!!! Someone can legitimately tell you they have a fund sporting 100% growth. Of course, it only grew by $1 total.
What if your fund was worth $100,000,000 and increased by $1,000,000? The growth rate would be a tiny 1%. But it still grew by $1,000,000.
What this says is the percent and absolute dollar are BOTH important metrics.