Getting 10%: Great Returns of 1%, 5%, 10% and More on Your Money
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Conversely, if you want to determine the purchasing power of the same Rs 10, in future, keeping all the other parameter as before, the formula is: Generally, an investment's annual rate of return is different from the nominal rate of return when compounding occurs more than once a year quarterly, half-yearly. The formula for converting the nominal return into effective annual rate is: If an investment is made at 9 per cent annual rate and compounding is done quarterly, the effective annual rate will be. Thanks to the power of compounding, the effective annual rate of the fixed deposit turns out to be 9.
Rule of 72 refers to the time value of money. It helps you know the time in terms of years required to double your money at a given interest rate. That's why it is popularly known as the 'doubling of money' principle. This is used to indicate the return on an investment over a period. The benefit of using this parameter is that it provides a smoothed-out return over a period, ignoring volatility.
There are three components that make up CAGR - beginning value, ending value and number of years. The equation is presented as: This comes to Let's compare Case I's performance with another instrument whose value rose from Rs 10, to Rs 20, in two years. Hence, if you have to compare the performance of any two asset classes or check returns from an investment over different time frames, CAGR is the best tool as it blocks out all the volatility that can otherwise be confusing.
Equated monthly instalments EMIs are common in our day-to-day life. At the time of taking a loan, we are shown a neat A4 size paper explaining the EMI structure in a simplified manner. It is generally an unequal combination of principal and interest payments. We absorb these details and move on with life. But have you ever wondered about the calculation behind these numbers?
If you are curious, then here is the formula. We all save small amounts at fixed intervals for a goal.
But, how can we know the possible savings ten years down the line? That is where the future value of SIP formula comes into the picture. Let's see how this functions. The beauty of the method is that an individual can invest a fixed sum as low as Rs at regular intervals monthly, quarterly or half-yearly in a disciplined manner.
It allows one to enjoy the benefits of rupee cost averaging along with compounding. The data required for this calculation are the amount to be invested per month, the rate of return and the period of investment.
Compound Interest Calculator - NerdWallet
Suppose you are investing Rs 1, each month for the next 10 years and expect a return of 15 per cent. Even though it may look like one of the jargons that analysts use to talk about a balance sheet, it is equally important in personal finance. This ratio indicates the overall health of one's finances. Robert Pagliarini'sThe Other 8 Hours: Buy Now on Amazon Full Disclosure: Junk bonds get a bad rap simply because of their name. There are basically two categories of bonds: Junk bonds offer higher interest rates and lower rates of volatility that individual stocks might experience regular market fluctuations.
Junk bonds typically have a rating of BB or Ba or less depending on whose scale you use. Precious metals can be a great alternative investment for your portfolio to help you earn a great rate of return on investments.
What are the best ways to earn at least a 10% rate of return on investment? US Treasuries are earning less than 1% and money market funds are not Here are 10 ways to earn a 10% ROI on your investments or maybe even more. . I was skeptical at first, but I have actually really enjoyed getting back into stock trading. 5 days ago Here are a few of the best low risk investment options, some that even let you lending platforms, Lending Club, is averaging a default rate of just over 5%. interest if you get a certificate of deposit for a period of at least years. If you want to learn more about the easy money you can score with credit.
Like most investments on this list, you should consider investing in gold, silver, and other precious metals with a small percentage of your total investment portfolio. I personally love to invest in silver. Individual investors can buy action from professional and amateur poker players. And, staking poker players can earn investors a great rate of return.
Investors put up a part of the buy-in in exchange for a one-time part of the winnings.
There are a couple of ways that individual investors can get involved and invest in poker players. Check out a couple of the other options that let you easily invest in poker players. The United States Motion Picture Company, an independent film company, is doing something that has never been done in the U. Check out my review of investing in a movie recently through WeFunder! Equity crowdfunding is like Kickstarter but instead of getting a t-shirt for your money, you own a piece of the movie and earn an income from its profits!
What do you think? How do you get the best return on investment?
Let me know in the comment section below. This post may contain affiliate links, which means we may receive a small commission if you click a link and purchase something. I only recommend products and services that I love and personally use. All opinions are my own. Please check out our privacy policy for more details.
Pepper addict , and a self-proclaimed investing junkie. He has written extensively for many nationally known financial websites and publications about investing, retirement planning, and even how to find the best return on investment.
Ten Ways to Earn a 10% Rate of Return on Your Investments
Email him directly at Hank[at]MoneyQandA. You can also subscribe to our Free Weekly Newsletter. It always amazes me when I see people put money in investments that will never earn anything close to the rate they owe their credit card company or student loan lender. I think a lot of that is down to people not knowing exactly what their credit card company is taking for themselves from the payments they receive each month.
Video courtesy of Khan Academy through Creative Commons license. Your k might get an immidiate return of any company match. Bitcoin and cryptocurrencies have definitely changed since added that part in Most of us are a victim of recency bias. The benefit of using this parameter is that it provides a smoothed-out return over a period, ignoring volatility. This is important because that self-assurance can prevent you from being whipsawed.
These are interesting ways. It has indeed captured my attention just like Zimmy said. Will research more about it. Nice effort, but I believe you may be shooting from the hip on this one.
Blogs are one thing. But sitting across the table from an investor looking to you for trusted advice with their retirement savings is another. Investing for retirement and other financial goals may start with just that…goals. Can you truthfully share your experience and commitment to the scheme you mentioned. These are great, unique ideas! Especially want to address P2P lending.
I suspect they will perform similarly to Junk bonds. In short pun intended highly risky and highly time consuming. That being said you might have two options for close to risk free return in this ballpark. Your k might get an immidiate return of any company match.
Get your head in the game
Also if your company offers an employee stock purchase plan you likely get a 15 percent discount at purchase. Beyond those essentially guaranteed returns if your lucky to be offered them I avoid concentrating too much on a return goal. Hank, despite the naysayers, you are correct on the aggregate. That is, this from your colleague Todd Tressider , we need to have a blend of each of these ideas in our portfolio.
A real estate holding; own a small business; and paper investments are a diversification that will provide the security and returns sought after. The P2P method sounds interesting and I am going to research it more as a way to diversify. I am more of a passive investor and tend to be conservative.
I have a close friend who deals in art and antiques as a side gig. He also sells high end football cards on eBay.
I was shocked at the price of how high they sell for. Especially signed and graded QB cards. I have hopes of starting my own video filming business, and I was wondering if you could explain how starting a business would give a boost to increase investment return? Thanks so much for mentioning our movie. For the first time in U. Thanks for the post. I think it all starts with goals and coming up with a strategy that facilitates achieving those goals. Some of the suggestions in this post require doing research and due diligence so that you can understand the risk and potential reward.
Once you do that then you can decide doing whatever you want. Something for everyone here. Many of the ideas would not be for me, but many are…. High yield bonds are too overpriced nowadays. The yields are near historic lows, and can only go up. Historically, stocks with strong buybacks have outperformed the stock market e. Just buy an ETF for buyback stocks. A couple of years ago, I was asked by a friend if I was interested in investing in his friend who is a pro poker player. I somehow know the pro player and have met him a few times at family parties. It was really interesting and have mentioned the idea to my wife.
End of the story. Thank you for sharing! I used to invest and only invested in real estate. Things changed until a tornado went pass the town where most of my properties located.
10 financial calculations one should know for managing one's finances
We always said do not put all the eggs in the same basket. This time I learned my lesson. Have been looking to diversify my investment for a while, awesome article at the perfect timing.