Typical return on investment vs risk (novice question)?

Question

Several investment questionairs ask what's your risk tolerance in investing (ie. high-risk, conservative, etc.) .
I'm wondering what one would consider the typical return on investment for a conservative investor? Also, what's considered a respectable return on investment? I guess something like 4 or 5% per year is not very respectable, but maybe I'm wrong!

Answer 1

you can initially use the Capital Asset Pricing Model (CAPM) which bakes in the risk-free rate, beta (volatility), and market premium. For example if the Treasury notes are 3%, and the beta is 1.0, and the market premium is 2%, then your required rate of return is 3% + (1.0*2%) = 6%

You can also use the Sharpe ratio to assess your required yield. This is a measure of risk-adjusted performance of an investment. It is S = (r - rf)/standard deviation

Answer 2

Stock investments if for humans who can type via inventory main points and put money into the 'proper ones'. It is a Do It Yourself procedure as we name it within the US. Mutual fund making an investment is making an investment with a supervisor or organization of managers who is meant to understand what they're doing and can purchase a host of shares. The returns will probably be averaged throughout many shares and for this reason 'probably' scale back. Now if you're a HOT SHOT and will relatively do good choosing inventory ALL THE TIME, then you are going to constantly do greater than Mutual Funds. Introduce the Index Funds into the combination and the query turns into just a little extra complex. In the US, person buyers (as a organization) have performed three% to four% go back via making an investment in shares. Mutual budget have performed so much greater, and averages 10% in line with yr. Index Funds just like the S&P have performed eleven.four% in line with yr. So there you've gotten it. This is a long run list, averaged over many resources, and annualized over many a long time. My numbers perhaps off just a little, however the relativeness is CORRECT. Make your possess selection.....Of path, if you're in India, the tale alterations due to the fact so much shares have long gone up, however then Mutual Funds are doing relatively good. Reliance Fund - Growth has performed 1081% over 10 yr (I am no longer off on my decimal factor!). It has performed 585% over five years (sure). And, those are numbers that I pulled center of final yr whilst the BSE marketplace was once down. Why no longer placed the cash in a fund, and benefit from the break day with loved ones or get a 2d process rather of doing inventory investments. Currently, I do inventory, M.Funds and Indexes. I have got to pay attention to my recommendation and quit losing my time with shares due to the fact it takes up 20 hours per week of my private time, and I don't even do that complete time!!!! KKP_Investor

Answer 3

yea your rite. 4-5% is nothing to brag about. I can get that with a CD or a Bond. typically 8-9% is average for the moderate-risk investor and -10% to 35% is a normal return rate for the High Risk investor. you could get in good with an moderate risk fun and make 8-9% a year easy and overtime that is something to brag about.

Answer 4

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