finance articles businesses business management business marketing Technologies finance accounting Industrial Manufacturing starting a small business Investment health information

What rate of return should I expect on my stocks?

The topic of this article is the answer to the following question: What rate of return should I expect on my stocks?

The rate of return you should expect on your stocks is a complicated question, and there is no one pat answer that will tell you what you should expect from all of your stocks.You buy different stocks for different reasons, and everybody has their own investment style that will allow them to accept different rates of returns.It's pretty easy to find the expected rate of return on a stock-all that you need to do is look up a stock analyst's report on the company that you're considering investing in.Make sure that you do your research on the company to make sure that it's the kind of company that you want to invest in, but along with your research, you will come across the expert-predicted expected rate of return.

However, even when you have calculated or found your expected rate of return on your stocks, you still have to factor in risk.Essentially, risk is the chance that you are taking that you will not achieve that expected return on your stocks.You can calculate your expected rate of return, but once risk is factored in, then chances are that your actual rate of return is actually much lower than your expected rate of return.You choose stocks based not only on what rate of return you would like, but also on how much risk you are willing to take.Generally speaking, the higher the risk of a stock, the higher expected potential rate of return.This means that if the stock plays out the way that it is expected to, you will get a higher rate of return that a number of other stocks.However, you are also gambling more with these high-yield stocks, because they have much more risk that they will not, in fact, yield your expected rate of return.If you don't want to take so much risk, or you are a conservative investor, then you should invest in stocks that post a lower expected rate of return because they have less risk.
There are a few different risks that you should consider when deciding what return you should expect on your stock.The first kind of risk that you should consider is the investment risk, which is, in essence, the risk that you are taking that the value of your investment will fall lower than it currently is.The way that investment risk is measured is by a measurement called standard deviation.The standard deviation of a stock demonstrates the volatility of your stock.The volatility of a stock is the prediction of how much a stock will rise or fall.The higher the standard deviation, the higher the risk of that particular stock.But don't worry-you don't have to figure out the standard deviation.Experts do that for you.
If you want to figure out the risk of your portfolio, then you will be looking at the beta coefficient risk measurement.The beta measure is what compares the risk of a stock as compared to the general risk of the stock market.If the beta is close to 1, then the stock is basically going to rise and fall at the same rate as the stock market.If the beta is much higher than one, then the stock will rise and fall at a higher rate than the stock market, and has a higher risk, but also a greater expected yield.And the opposite is true is the beta measurement is lower than 1.
When it comes down to it, when you are putting together a portfolio, the best thing that you can do to ensure that you have the rate of return on your stocks that you want is to diversify your portfolio.Mix your portfolio with both low risk and higher risk stocks so that you can have more stable investments along with ones that promise to give you a higher yield on your rate of return.Each stock ahs a different expected rate of return, but if you look up analyst reports, you can determine the expected rate of return along with the predicted risk of a stock so that you can decide if this particular stock fits in with your investment style.

FREE: Get More Leads!
How To Get More LeadsSubscribe to our free newsletter and get our "How To Get More Leads" course free via email. Just enter your first name and email address below to subscribe.
First Name *
Email *

Get More Business Info
Sponsored Links
Recent Articles


Copyright 2003-2020 by - All Rights Reserved
Privacy Policy, Terms of Use