Understanding the concept of return on investment (ROI) is the first step to possibly generating a 10%+ return. Keep in mind, however, that a 10%+ ROI is not a guaranteed result. ROI is a financial metric widely used to measure the possibilityof gaining a return from an investment based on its past performance. It is calculated by subtracting the cost of investment from the current value of investment, then dividing it by the cost of investment. The right investment choices to achieve that type of return will depend on a number of factors such as the current conditions of the market. Navigating these calculations and investment choices can be complex, which is where consulting a professional financial advisor can be particularly helpful.
What Is Your Return on Investment?
Calculating ROI involves determining the gain from your investment relative to the cost of your investment. Let’s simplify it with an example. Assume you invested $1,500 in a venture and later, it’s worth $1,650. Your ROI is then ($1,650 – $1,500) / $1,500 = 10%. Regularly tracking your ROI can be made easier with digital tools or even the assistance of a financial advisor. They serve crucial roles in assessing the efficiency of your investment and comparing the ROI against the ROI of other investments.
Investments That Can Potentially Return 10% or More
Investing money wisely is a skill set that isn’t just reserved for Wall Street tycoons. With the right knowledge and strategies or the guidance of a skilled financial advisor, anyone can make strides to unlock their wealth potential and aim for a 10% return on investment. Various investment options might yield a 10%+ return. Nevertheless, it’s important to proceed with caution because past returns are not indicative of future results.
Stocks are a popular choice for many investors. For example, Apple’s stock has returned more than 898% over the past decade even if it is a bit of a unicorn stock. Investment decisions like this should be based on one’s risk tolerance, considering all factors involved. Here are some investments that have, cumulatively, returned 10% or more in the past:
- Stocks
- Real Estate
- Private Credit
- Junk Bonds
- Index Funds
- Buying a Business
- High-End Art or Other Collectables
None of these investments return 10%+ at all times so it’s important to check with a professional on what investments might help you best achieve your goals.
Diversifying Your Portfolio to Reach a 10% Return
Diversification is a risk management strategy that encompasses a wide variety of investments within a portfolio to potentially achieve higher returns with lower risk. A diverse portfolio could consist of 30% in a mix of value and growth stocks, 30% in index funds, 20% in bonds, 10% in real estate and 10% in alternative investments like P2P lending or commodities. However, diversification can have nearly unlimited combinations in an effort to reach your goals.
The benefits of diversification come in the balance of catching nice returns when certain investments take off while spreading your risk out as well. If one type of investment drops your entire portfolio won’t take a hit and you’ll be able to take advantage of potential strong returns with other assets. This way if one asset is returning 15% but another drops to only a 2% return, it’s still possible for your entire portfolio to reach a steady 10%+ return.
Bottom Line
Investing is a financial strategy that possibly can lead to substantial wealth if done correctly. Nevertheless, it’s not a guaranteed path to riches and it requires care, patience, regular reviews and possible adjustments over time. By understanding the concept of ROI, identifying potentially lucrative investment options, diversifying your portfolio and regularly checking your investments, it’s possible to unlock your wealth potential and strive for that 10%+ return on investment. Making use of professional advice from financial advisors can be beneficial in achieving your desired returns as well.
Tips for Investing
- It can be difficult to find the right investments to meet your overall financial needs, especially if you’re not an experienced professional. With the help of a financial advisor, you can find the right balance in your portfolio to aim for a 10% return over time. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- You can use SmartAsset’s free asset allocation calculator to see what your portfolio might look like with your chosen risk profile.
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FAQs
Investments That Can Potentially Return 10% or More
Various investment options might yield a 10%+ return. Nevertheless, it's important to proceed with caution because past returns are not indicative of future results. Stocks are a popular choice for many investors.
How to get 10% ROI? ›
Investments That Can Potentially Return 10% or More
- Stocks.
- Real Estate.
- Private Credit.
- Junk Bonds.
- Index Funds.
- Buying a Business.
- High-End Art or Other Collectables.
Investments That Can Potentially Return 10% or More
Various investment options might yield a 10%+ return. Nevertheless, it's important to proceed with caution because past returns are not indicative of future results. Stocks are a popular choice for many investors.
Is a 10% ROI good? ›
General ROI: A positive ROI is generally considered good, with a normal ROI of 5-7% often seen as a reasonable expectation. However, a strong general ROI is something greater than 10%. Return on Stocks: On average, a ROI of 7% after inflation is often considered good, based on the historical returns of the market.
Is 20% ROI possible? ›
A 20% return is possible, but it's a pretty significant return, so you either need to take risks on volatile investments or spend more time invested in safer investments.
Is 15% ROI possible? ›
Investing properly is not a gamble. We should not lose money in the stock market on a long term basis. In fact, a near guaranteed return of 15% or higher is a realistic expectation.
Is 30% ROI possible? ›
A thirty percent return is an achievable feat for one year if you're aggressive enough (and shall I say lucky enough), AND have the stomach to ride out the volatility, but consistently performing year after year becomes an incredible challenge that no one to my knowledge has done.
What is the safest investment with the highest return? ›
These seven low-risk but potentially high-return investment options can get the job done:
- Money market funds.
- Dividend stocks.
- Bank certificates of deposit.
- Annuities.
- Bond funds.
- High-yield savings accounts.
- 60/40 mix of stocks and bonds.
This rule is one of the most basic rules that help an investor become a crorepati. It says that if you invest Rs 15,000 a month for a period of 15 years in a stock that is capable of offering 15% interest on an annual basis, then you will amass an amount of Rs 1,00,27,601 at the end of 15 years.
What gives the highest return on investment? ›
The U.S. stock market is considered to offer the highest investment returns over time. Higher returns, however, come with higher risk. Stock prices typically are more volatile than bond prices. Stock prices over shorter time periods are more volatile than stock prices over longer time periods.
A stock portfolio focused on dividends can generate $1,000 per month or more in perpetual passive income, Mircea Iosif wrote on Medium. “For example, at a 4% dividend yield, you would need a portfolio worth $300,000.
Is a 7% return realistic? ›
While quite a few personal finance pundits have suggested that a stock investor can expect a 12% annual return, when you incorporate the impact of volatility and inflation, 7% is a more accurate historical estimate for an aggressive investor (someone primarily invested in stocks), and 5% would be more appropriate for ...
How much money do I need to invest to make $3,000 a month? ›
Imagine you wish to amass $3000 monthly from your investments, amounting to $36,000 annually. If you park your funds in a savings account offering a 2% annual interest rate, you'd need to inject roughly $1.8 million into the account.
Can you have a 100% ROI? ›
Return on investment (ROI) is calculated by dividing the profit earned on an investment by the cost of that investment. For instance, an investment with a profit of $100 and a cost of $100 would have an ROI of 1, or 100% when expressed as a percentage.
Can ROI be 400%? ›
A higher ROI percentage indicates a more profitable investment. This means that you made a 400% profit on your investment. It is important to note that ROI can be calculated for different types of investments, such as financial investments, business investments, and personal investments.
Is 50% ROI possible? ›
Is 50% a Good ROI? ROI of 50% can be considered good, but there are other factors to consider to understand if your investment was a good one.
What is a 10% ROI? ›
This is known as the rate of return or return on investment. The rate of return is expressed as a percentage of the total amount you invested. If you invest $1,000 and get back your original investment plus an additional $100 in interest, you've earned a 10 percent return.
What does 10% ROI mean? ›
Return on Investment (ROI) is a popular profitability metric used to evaluate how well an investment has performed. ROI is expressed as a percentage and is calculated by dividing an investment's net profit (or loss) by its initial cost or outlay.
How can I calculate ROI? ›
You may calculate the return on investment using the formula: ROI = Net Profit / Cost of the investment * 100 If you are an investor, the ROI shows you the profitability of your investments. If you invest your money in mutual funds, the return on investment shows you the gain from your mutual fund schemes.
How to get 12 percent return on investment? ›
How To Get 12% Returns On Investment
- Stock Market (Dividend Stocks) Dividend stocks are shares of companies that regularly pay a portion of their profits to shareholders. ...
- Real Estate Investment Trusts (REITs) ...
- P2P Investing Platforms. ...
- High-Yield Bonds. ...
- Rental Property Investment. ...
- Way Forward.
