How to Determine What a Good Investment Return Really Is
First, lets get clear on what your return is. You calculate this by comparing what you started with to what the end result is. Simple.
But that doesn’t tell you the whole story. Just knowing that your portfolio returned 7.35% last year just tells you what the return was in a vacuum. You still don’t know if 7.35% is a decent return for your specific portfolio. This is important because you need to make sure you take on as little risk as possible in exchange for that return. What if other people made similar returns but with half the risk? You see where I am going with this.
Your Financial Goals
One way to look at your investment returns is to compare them to your financial goals.