Originally Posted by
Baa_Baa
Ok, so feeling a bit thick here, seems I might have missed something and didn't understand Dobby's reply. To my mind, if I bank $1 and the government gives me $0.50c, every year, then I made a 50% return. Then if I do it the year after, and the year after that, I still am getting 50% every year. When I withdraw all my money, I get everything I deposited back, plus 50% that the government gave me. To me it's not an 'investment' or a portfolio, it's just a bank account that I can't withdraw from, until I can, that gives me back all my money and 50% more than I paid into it. (not including gains on the account or fees). So let's say I deposited 10 years of $1 and got $0.50c every year from the government, that's a total of $15 I can withdraw, for the $10 I deposited, so that's 50% gain.
Can you show me the maths that I can understand why my logic is wrong?