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The return is basically the amount of profit you have made on your investment.
And, as you might expect, this is a tricky question to answer. Different asset classes typically offer different rates of return – which can go up and down considerably from year to year.
In general the size of the return relates to the level of risk you are willing to take.
In the past, annual returns around 2% to 4%* above inflation would have been par for the course for a typical mixed portfolio. But note, this is over the long term, after all the extreme highs and lows in price have been averaged out.
* Source: Credit Suisse Global Investment Returns Yearbook 2013. Annualized UK returns 1963 to 2012. Assumes portfolio with 60:40 mix of shares to bonds. Assumes fees/expenses between 0.5% and 2.5%. Rounded down to nearest 1%.
Our research has helped us create a list of the top ten most frequent questions that people who are new to investment ask.