APPENDIX: Retirement Savings QuestionnaireFigure 16.A1 shows the annual rates of return (or growth rates) for Funds
A, B, C, D, and E from 1970 through 1996. These rates indicate the per-
centage change in the value of your funds in a given year. As you can see,
funds on the top of the page had a higher average rate of return, but the re-
turns were more variable. For example, in the best year Fund A grew by
37.5 percent, while in the worst year the fund lost 26.4 percent of its value.
The average was 13.4 percent. On the contrary, funds on the bottom of the
page had a lower average rate of return, but the returns were less variable.
For example, Fund E offered an average return of 9.7 percent but less vari-
ability. The annual rate of return was between 32.6 percent and negative
2.9 percent. No adjustment has been made for inflation, which averaged
3.1 percent over this period.
If these funds were my only retirement options, and I had to choose one
fund only, I would choose the following fund: _A_B_C_D_E.
598 BENARTZI AND THALER