High Propensity For High Returns

Eliminating the Date Lottery means delivering a higher propensity for higher returns, but keep in mind these higher returns are not guaranteed.

Hypothetical question: Someone selling me an annuity only tells me they have the following two annuities with these ranges of return rates.

Which one should I choose?

      1) 5% - 24%

      2) 3% - 15%

The answer is neither. It’s impossible to know from that very limited amount of information if the annuity is right for your situation. One thing I would like to know is the distribution of the propensity for each of those annuities to return those rates.

In other words, let’s say 1000 people purchased the first annuity product and only one of them made 24%, and 999 of them made 5%. But in the second annuity, of 1000 people, 999 of them made 15%. This is why the propensity for higher returns needs to be taken into account and not just the possible ranges.

To make it simple, in assisting you with the analysis we ignore the noise and hype. In purchasing our own personal annuities we target those with a high propensity to return our target interest rate, although we understand that no return is guaranteed. We measure the propensity for certain returns through backtesting.