101-02 What are your investment goals?

What are your investment goals? Generating income, saving, planning for retirement, or maximizing your wealth?

This is a question that everyone should ask themselves, regardless of their age or net worth. It’s important to have a plan for your money, and to know what you hope to achieve with it. In this blog post, we will discuss various investment goals and explain how you can reach them. We’ll also provide some tips on how to stay disciplined when investing. So, whether you’re just starting out or you’ve been investing for years, read on for helpful advice!

Course 101: Introduction to Investing
What are your investment goals?

One common investment goal is to simply grow your money. This can be done through a variety of methods, such as investing in stocks, mutual funds, or exchange-traded funds (ETFs). Another goal may be to generate income from your investments. This can be accomplished by investing in bonds or dividend-paying stocks. And finally, some people may seek to preserve their capital, especially if they are nearing retirement. This can be done by investing in low-risk assets such as government bonds or cash equivalents.

No matter what your investment goals are, it’s important to stay disciplined with your investing strategy. One way to do this is to set up a budget and invest only what you can afford to lose. It’s also important to have a diversified portfolio so that you’re not putting all your eggs in one basket. By diversifying, you can mitigate some of the risk involved with investing.

Table: Investment Goals, Returns & Risks

Investment Goal Investment Estimated Return p.a. Risk
Income Dividend Investing 2% Low
Building Wealth Growth Stock Investing 7%-12% Medium
Building Wealth Real-estate 7% Medium
Saving Money Index ETFs 5% Medium
Saving Money Bonds 1% Low
Hedging Against Inflation Gold, Silver, Commodities 3% Medium
Retirement Balanced Portfolio 7% Low-Medium
Speculation Trading 10-15% High

“There are no sure and easy paths to riches on Wall Street or anywhere else”

Benjamin Graham – The intelligent investor

Investment Goal Examples

Generating income

There are many ways to generate income through investing. One way is to purchase stocks or mutual funds that pay dividends. Dividends are payments made by a company to its shareholders, usually quarterly or annually. Another way to generate income from investing is to invest in bonds. Bonds are loans that investors make to entities such as corporations or governments.

Building wealth

Building wealth through investing is all about finding the right balance of risk and reward. While there are no guarantees in investing, diversifying your portfolio across a mix of asset classes and investment vehicles can help reduce your overall risk while providing the potential for higher returns. For example, you might consider investing in stocks, mutual funds, real estate, and other assets.

The S&P500 has averaged an 11% profit per year over the last 20 years. So you should not expect more than 11% from your stock investing.

Saving money

Investing is one of the most effective ways to save money. When you invest, you are essentially putting your money into something that has the potential to grow over time. This can be a great way to reach your long-term financial goals. There are a variety of investment vehicles you can choose from, such as bonds, mutual funds, and real estate. Finding the right mix of investments for your portfolio will depend on your individual financial goals and risk tolerance.

Hedging against inflation

One way to hedge against inflation is to invest in assets that have the potential to maintain or increase in value over time. This can include stocks, bonds, real estate, and other assets. Another way to hedge against inflation is to invest in commodities, such as gold or silver. These commodities have a history of maintaining their value during periods of inflation.

Investing for retirement

Retirement planning is all about finding the right balance of risk and reward. While there are no guarantees in investing, diversifying your portfolio across a mix of asset classes and investment vehicles can help reduce your overall risk while providing the potential for higher returns. For example, you might consider investing in stocks, bonds, mutual funds, real estate, and other assets.

Speculating on the future asset prices

When you speculate on the future price of an asset, you are essentially making a bet on where the market will go. This can be a risky proposition, but if you do your homework and understand the risks involved, it can also be a great way to make money. There are a variety of ways to speculate on the future price of an asset, such as buying stocks, futures contracts, or options. Finding the right strategy for you will depend on your risk tolerance and investment goals.

These are only a few examples, but there are many other goals that investors may have. The important thing is to align your investment strategy with your goals so that you can make the most of your money.

So what is the realistic maximum? What do the best of the best achieve?

How much can you make in the stock market?

Warren Buffett is a self-made billionaire who made it all from investments in stocks of companies. Buffett’s annual compound rate of return is 24.7%. George Soros is a self-made billionaire make an annual compound rate of return of 28.6%

So it would seem over the long-term if you can achieve a rate of return close to 25% you are doing extremely well, in fact, you are among the best of the best.

Summary

As you surf the web, you will be accosted by certain “Get Rich Quick” schemes, offering you amazing rates of return on your money. Typically these take the form of Hot Stocks Newsletters, Special Trading Systems, Personal “Rags to Riches” stories to touch your emotions, “and for only $50 per month, you too can learn to secret to unparalleled wealth”.

Do not believe the hype. Do not expect more than 25% per year, at the very most. Ask these people, if they are so successful, why are they not on the Forbes Rich List?

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