Normal: 7% from stock market.
That’s what you get if you do a compound interest calculation over the growth of S&P 500.
This is the answer you will get from Google.
But most investors don’t get 7%
Here’s what people usually get
- 95% of day traders fail. This means they get a negative return
- For people who invest in mutual fund, they usually get around 4% after transaction cost. Yes, they get less than the market index
- For people who invest in ETF funds, they usually get around 6%. This is 7% – 1%. The management fee of ETF funds are lower because there is less activity. It’s a very passive fund.
- For people who invest in private equity (this is no longer the “normal” return), they usually aim for somewhere between 25% to 50% per year. However, this is usually not accessible by general public as the minimum investment is $100K +
- For myself, I manage my own portfolio and I aim to make around 20% to 30% per year, similar to private hedge funds. To date, I made over 300% from the market in the last 2.5 years. My student made 100% since he started.
- For real estate investors, it depends if you want to consider leverage or not
- For non leverage real estate, you usually get around 6 to 10%, including capital gain. However, you need to have the downpayment fo real estate.
- For leveraged real estate, you might be able to get 50% to 100%. However, you need to have the downpayment fo real estate.
Anyways, in the last couple of weeks, I made a fun little investing quiz which has gone viral. I originally made this quiz for my students to identify weakness in their investment strategy. It’s a 12 question quiz. If you’re interested, you can try it hereas well.
I also made a free course on how to set up your chart for investing. This is the exact template I use. You can take the course for free. The catch is that if you don’t complete the course 7 days – then you get a penalty of your choice.