What is the Best Return on Investment Rate?

A reader asked; what is the best return on investment? Daniel S. from South Carolina, USA is investing some portions of his paycheck every month. He is really serious in preparing his retirement. He knows already how to start investing money in stocks. Daniel preferred to invest money in the stock market and business ownership. But, he is curious if it’s okay if he will continue investing some portions of his paycheck every month if his investment in stocks is gaining only 12% per year and 17% gain in his enterprises.

Last night while I am thinking what to answer to Daniel’s question, I read some blogs and investing books. Many experts has different point of views on what is the best return on investment.

Some say, if you invest in stocks and your portfolio is making 9% per year, you’re a good stock market investor. Other financial experts say, it is ideal to meet 12% per year to accumulate wealth faster.

Is 25% Return on Investment Good?

In my opinion, capital gain has no limit. If your investments can gain 12% per year, you’re doing good. But as I’ve said, earn as much as you can. If you can make 25%, 50%, 100%, or even 1,000 percent capital gain per year, it’s fine.

But, be careful not to become greedy. Sometimes you gain 12%, many times your investment will gain only 9% per year or below. As long as your investments earned higher than the inflation rates, you’re doing fine.

Don’t expect to earn much money if you invest in low risk types of investments such as time deposits and savings. If you want to earn at least the average of 9% per year, invest in medium to high risk types of investments such as stocks, mutual fund equity type and business ownership.

Determine the Best Return on Investment

Only an individual investor can determine the best return on investment. If an investor is planning to double his investment capital in 5 years, his investment should earn at least 14.4% per year. Learn how the effective strategies in stock market investing and know how can your business capital earn more. If you want to get the best ROI, you will need to continue learn investing along the way. Maybe you can earn more today and lose some money tomorrow. Ask yourself, how can you make your average return on investment become higher.

What about you, what do you think is the best return on investment? Let me know your opinion about this topic. Just write your comment below. Thank you!