When you are investing in your future, it is important to have some goals and expectations for your investments. If you are just putting your money into the market and hoping for the best, you are going to have a difficult time staying motivated about building your portfolio. It is important to have some solid expectations on the returns of your investments.
It is important to be financially educated
Financial education is going to help you have a better idea of how to invest in the long run. You will be able to create much more realistic goals when you have already learned what it will take for you to have a high quality of living for your financial situation.
Have realistic expectations
There are many beginning investors who may think that is it realistic to have returns of 30% every year because they heard from their friend about a hot stock or index. These types of returns are not realistic when you are investing over a long period of time. It is important that you have more realistic expectations that won’t leave you disappointed after investing your money into the market.
Look at historic returns
When you look at historic returns, you will have a better idea of what to expect out of your investments. On average, a stock will yield a return of 4.8 percent annually. When you have looked at these numbers, you will be able to have a much better strategy for your long term success.
Averages are not always completely accurate
While averages are a great thing to look at and base your investments off of, it is never a surefire thing. There are going to be years where the stock market just outperforms. Likewise, there are going to be years where the market is underperforming. You need to hedge your investments by diversifying your portfolio.
Once you learn more about what you should expect from your investments, it will be easier for you to approach the growth of your portfolio with confidence.