What is a realistic return?

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Many people have too high an expectation when it comes to how much they can make from the stock market. Everyone forgets that Warren Buffett in his partnership days achieved about 15 % CAGR.

So one way to gauge how much you can make is to look at the index returns of the market you are investing in. If you can consistently do better by 1/4, you can pat yourself on the back.

The table below is taken from my article "Baby Steps into the Investment Universe: Beginners: Part 1 of 3"

It shows the index returns for the top 10 stock exchanges around the world. You can see that even with a 20 years investing horizon, you can lose money in some stock market.

Moral of the story? Unless you know which market will do well in the coming 20 years, maybe it is better to diversify globally.

[Image: Stock-market-returns.png]

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