The 10 Percent Rule helps the investor in identifying and understanding broad market swings. It is a simple rule and assists the investor in avoiding defective value judgments. The investor calculates the value of his/ her portfolio at a specified interval, say every week.
Here are some strategies for an aggressive investor with a higher risk tolerance than most.
Most investors would view an average annual rate of return of 10% or more as a good ROI for long-term investments in the stock market. However, keep in mind that this is an average. Some years will deliver lower returns -- perhaps even negative returns. Other years will generate significantly higher returns.
Top 10 Ways to Earn a 10% Rate of Return on Investment
That means 10% of the cash in the bank, assets, profits. ... So even in a simple example, holding 10% of a company's only form of stock just means you hold that stock and doesn't give you the ability to take 10% of the money in the company's bank account or 10% of the widgets being held in inventory.
If you own an individual stock that falls 10% or more from what you paid, you sell. Period. ... Just to break even — and get back to $50 — the stock needs to rise 11.1%. Let's say instead of selling at a 10% loss, you wait until the stock falls to $40 a share, for a 20% loss before selling.
Bonds / Fixed Income Investments include bonds and bond mutual funds. ... Stocks / Equity Investments include stocks and stock mutual funds. These investments are considered the riskiest of the three major asset classes, but they also offer the greatest potential for high returns.
Bonds are one step closer to risk: While they perform better than stocks during bear markets, they have much lower returns during boom years (think 5-6% for long-term government bonds). Finally, stocks are the most aggressive investment.
Even if you have no retirement savings at age 50, it isn't too late to get started. Here's how: You should be using a retirement account of some sort to invest your money. Whether it's a 401(k), a 403(b), a traditional or Roth IRA or some other plan, having an investment vehicle to put away money is key.
So it's probably not the answer you were looking for because even with those high-yield investments, it's going to take at least $100,000 invested to generate $1,000 a month. For most reliable stocks, it's closer to double that to create a thousand dollars in monthly income.
Similarly, if you want to double your money in five years, your investments will need to grow at around 14.4% per year (72/5). If your goal is to double your invested sum in 10 years, you should invest in a manner to earn around 7% every year. Rule of 72 provides an approximate idea and assumes one time investment.
Your investment rate of return is the percent increase or decrease in the value of your investment, typically over a one year period. If you invest $1,000 on January 1 and at the end of the year your investment value is $1,100, then you've earned a 10% rate of return.
Yet No Comments