How much return should i get

But at their best a robo-advisor can build you a broadly diversified investment portfolio that can meet your long-term needs. If you buy a lot of stock funds because you have a high risk tolerance, you can expect more volatility than if you buy bonds or hold cash in a savings account.

So risk is in what you own. The potential reward on a robo-advisor account also varies based on the investments and can range from very high if you own mostly stock funds to low if you hold safer assets such as cash in a savings account. A robo-advisor will often build a diversified portfolio so that you have a more stable series of annual returns but that comes at the cost of a somewhat lower overall return.

Here are the best robo-advisors right now. You have almost no risk at all of not receiving your payout and your principal when the CD matures. Long-term investing can be your path to a secure future.

In investing, to get a higher return, you generally have to take on more risk. So very safe investments such as CDs tend to have low yields, while medium-risk assets such as bonds have somewhat higher yields and high-risk stocks have still-higher returns.

Investors who want to generate a higher return will usually need to take on higher risk. Some of the best short-term investments are much safer. Can you withstand a higher level of risk to get a higher return? It can be demoralizing to sell an investment, only to watch it continue to rise even higher. Make sure you understand your investment strategy, which will give you a better chance of sticking with it when it falls out of favor.

One way you can actually lower your risk is by committing to holding your investments longer. The longer holding period gives you more time to ride out the ups and downs of the market.

So investors who put money into the market should be able to keep it there for at least three to five years, and the longer the better. So you can use time as a huge ally in your investing. You can set up a long-term plan and then put it mostly on autopilot.

As mentioned above, no investing strategy works all of the time. Index funds are a great low-cost way to achieve diversification easily. They allow you to invest in a large number of companies that are grouped based on things like size or geography.

By owning a few of these sorts of funds, you can build a diversified portfolio in no time. It might seem exciting to put all your money in a stock or two, but a diversified portfolio will come with less risk and should still earn solid returns over the long term.

It could go up or down a lot in the short term. That kind of regularity and investing discipline is valuable for long-term investing.

While any time can be good to invest for the long term, it can be especially advantageous when stocks have already fallen a lot, for example, during recessions. Lower stock prices offer an opportunity to buy stocks at a discount, potentially offering higher long-term returns. However, when stocks fall substantially many investors become too afraid to buy and take advantage.

But that means you need to plan ahead and already have your brokerage account open and funded. Long-term investments give you the opportunity to earn more than you can from short-term investments. The catch is that you have to take a long-term perspective, and not be scared out of the market because the investment has fallen or because you want to sell for a quick profit. By focusing on the long term, you can ride out the bumps.

Investing for the long term is one of the best ways to build wealth over time. Editorial Disclaimer: All investors are advised to conduct their own independent research into investment strategies before making an investment decision. In addition, investors are advised that past investment product performance is no guarantee of future price appreciation.

How We Make Money. The ROI Calculator consists of a formula box, where you enter the initial amount invested, the amount returned, and the investment period. The ROI Calculator shows you the total gain on investment. It also shows you the absolute return on investment, annualised return on investment, and the CAGR or the compounded annual growth rate. How does ROI Calculators work? You must understand the difference between the absolute return on investment and the annualised return on investment.

The absolute return measures the performance of the stock market for periods of less than one year. If you want to determine the performance of an investment over different holding periods, you use the annualised return on investment. You have the initial value of the investment as Rs 30 lakh and the final value of the investment as Rs 50 lakh.

You have held the investment for five years. The holding period is five years. Enter the amount returned. You then enter the holding period of the investment. If you are able to cut down on spending on wants, then you can utilise the same in increasing your mutual fund investment.

Millennials are investing in mutual funds as they offer much-needed flexibility. One can invest a small amount periodically. However, this is not the only factor that is making mutual funds so popular these days. Mutual funds are one of the few investment vehicles that have the potential to offer inflation-beating returns. Inflation is something that reduces the worth of your money or investment over time. A product costing Rs today may cost Rs after five years.

Therefore, in order to retain and realise the real worth of your investment, it is imperative that you earn inflation-beating returns. The best way to do this is by investing in mutual funds. Mutual funds can be of great help to plan your future. I Accept Show Purposes. Your Money. Personal Finance.

Your Practice. Popular Courses. Financial Analysis How to Value a Company. Table of Contents Expand. Interpreting the ROI. ROI Example. Annualized ROI. Investments and Annualized ROI. The Problem of Unequal Cash Flows. Advantages of ROI. Disadvantages of ROI. The Bottom Line. ROI has a wide range of applications, including: It can measure the profitability of a stock investment when deciding whether or not to invest in the purchase of a business or evaluate the results of a real estate transaction.

ROI is calculated by subtracting the initial value of the investment from the final value of the investment which equals the net return , then dividing this new number the net return by the cost of the investment, then finally, multiplying it by ROI is relatively easy to calculate and understand, and its simplicity has made it a standardized, universal measure of profitability.

One disadvantage of ROI is that it doesn't account for how long an investment is held; so, a profitability measure that incorporates the holding period may be more useful for an investor that wants to compare potential investments. Compare Accounts. The offers that appear in this table are from partnerships from which Investopedia receives compensation.

This compensation may impact how and where listings appear. Investopedia does not include all offers available in the marketplace. Related Articles. ROI: What's the difference? Partner Links.

Pro Rata Pro rata is used to describe a proportionate allocation. It is a method of assigning an amount to a fraction according to its share of the whole. Return In finance, a return is the profit or loss derived from investing or saving. Investopedia is part of the Dotdash publishing family.