FDIVX has a very good return in the last year. However, the other years don’t look so hot. This fund just had one good year after 5 mediocre years. 3 yr and 5 yr returns are 20.98 and 17.18%, giving us a little over 6% annually over 3 years, and 3.5% annually for the 5 year return.
There are funds which earn a high return, but typically that good fortune lasts for only one or two years. We never know ahead of time which fund will have that good fortune to outrun the pack. It’s impossible to know in advance which fund will earn 10% next year.
We can’t assume a 10% return on our money when we make calculations about alternate returns. I think 5% – 7% is more realistic, although even 7% is high in today’s bloated stock price environment.
