Winvestment

I often get the question what is an adequate rate of return on my investment? This question is impossible to answer. The average rate of return of the S&P 500 index since 1928 has been 10 %. That means that if you invested 1 dollar in the S&P index in 1928 you would have 43,900$ today. Not bad! Only problem is people are emotional and respond to stressful situations poorly. If you had invested in 1928 you would have gone through the great depression, WW2 and so on and surely taken your money out of the market which would then have affected your total outcome. So you can't surely expect a rate of return of 10 %. Whilst tinking about the rate of return you should also take into account the fact that while the ROI is going up risk is also going up. In the graph on the left the illustration of risk vs ROI is illustrated. Here while you might be getting a higher ROI your risk is also going up. For example, stocks are seen as high risk investment and have given a 10 % ROI ...

The best way to become a millionaire! So everyone has read the different books about all the different ways to become a millionaire. What these books don't say is that they are full of it. You don't need to be a genius to get rich you just need 1 thing , which is the most valuable thing there is. Time ! Time doesn't just grow trees but will also grow capital and it is your most valuable asset. Lets make a demonstration of this. Imagine you have 2 alternatives: Alternative 1: Get one hundred thousand dollars now to invest. Alternative 2: Get one million dollars in 30 years time. If you look at both sums you naturally do the math one million is 10 times one hundred thousand and therefore you should take the one million but what you miss to take into account in this example is that 100 000$ in 30 years isn't still worth 100 000$ if you take into account investing the sum. The financial markets has generally given an 8 % annual return. Therefore if you calcu...