Learn How to Build Wealth Volume 3–Determine ROR
When we choose investments we are almost never guaranteed a rate of return. Even after completing hours of research, the rate of return (reward) and the probability of loosing money (risk) are more than likely “hopefuls wishes” at best. We hope our investments perform well, and allows us to pay for future financial wishes.
To ensure our investments are on track we need to monitor their performance. One way we can evaluate an investment’s performance is by calculating its rate of return. Comparing how an investment is currently doing to how we had hoped it will perform is important. In addition to the comparison of rate of return, we need to keep in mind the time frame or the length of time we plan to hold our investment before we cash out to pay for goals. The closer we are to needing invested money to pay our financial costs the lower investment risk they should be in.
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