What is a good Rate of Return on investments (ROI)?
- Asked By
- Updated On:03-Feb-2021
- Replies:1
Short Answer
A good return on investment is where a person makes considerable profits form their investments after a long period. However, the profits can vary form one person to another.
Detailed Answer
- How one can achieve 15% assured return every year by investing 5 lakhs?
- Can you earn at least Rs. 70 - 80 k per month with share trading and investing on a capital of Rs.5 lakh?
- How can I invest 3.5 lac for 15 years for getting around 10% return post all broker charges?
Essentially all these questions are variant of one question: What is a good Rate of Return on investments (ROI)?
Defining Good Return on Investment
What is a good return is something which varies from person to person, for some folks 10% is a good return for some folks 15% also seems less, but is their an independent way we can define good returns well let's look at some data , below is 30 year return data from SENSEX , in this time SENSEX returned around.
So in little over 30 years sensex grew almost 60 times, thus giving us a CAGR of 14.57% approximately .
So we have one benchmark from the stock market over reasonably long terms of 14.57%
Now lets look at other possible benchmarks, if you put all this money in Fixed deposits your annual rate will be in the range of 7-7.5% so that's a reasonable risk free benchmark, though there is a tax deduction at source so your actual returns will be far lesser than the benchmark interest rates.
Beyond financial instruments there are non-financial instruments or options like investing in real estate which can provide good returns, while we do not have good data on Real estate returns in India.
I hope that this made sense and gives oneself perspective of future returns to expect.
Ask Your Query for FREE, Get quick answers from our FINTRAKK community!
Discussion (0)
Fixed Deposit (FD) are saving tools offered by banks to deposit lump sum amount for a fixed period of time on a higher interest rate than saving accounts. Mutual funds are investment products which pool money from numerous small investors to create a fund.
Liquid funds, a type of mutual funds which invest in different money market instruments. The withdrawals from these funds are processed within 24 hours and that's why these are regarded as liquid assets. The fund manager gets flexibility to meet immediate redemption requests.
There are several investment plans such as FD, Post office Monthly Savings Scheme, Government Bonds, Mutual Fund Monthly Income Plans. These can provide you with a very good monthly income.
There are several questions that one can ask your advisor. These questions include whether its good time to enter or exit the market? Should in exit from debt and move to FD? do I continue my SIP portfolio? and other such questions.
Investing in stocks can make you a millionaire, provided you follow the necessary steps. These include investing regularly, picking good quality stocks, and most importantly playing the long-term game rather than trying to make a million in months or a couple of years.
Intrinsic value basically means real stock value and can be calculated using these three ways:
- Discounted cash flow analysis
- Analysis based on financial metric
- Dividend Discount method
FD vs Mutual Fund vs Real Estate Investment has its advantages in terms of how much you invest and your investing period. Longer the period, higher the returns.
Government securities include both T-Bills (Treasury Bills) and Government bonds which are both short and long-term instruments issued by the Central & State governments for various purposes. Retail investors are allowed to invest in G-Secs provided by the RBI. One can buy them directly from the Stock exchanges in a non-competitive method.
We all look to earn good returns on the money we invest. Putting money in High return investments is one way of generating better income. The different places to get good returns are mutual funds, equity, and gold investment in India.
The best investment plans in India for a year are to invest in fixed deposits, short-term funds, and ultra-short-term funds. These are less risky and produce relatively higher returns than banks.