I’ve spent the last year learning to accept a nominal return on the investments I’ve made. This process helps me to focus on the value that was gained, rather than the price of it. That being said, I do need to consider the risks when making the investment decisions. If I take a risk on a product or service, I always want to know the long-term returns.
Ive been thinking about doing a few things myself after I’ve learned how to do these things. As I’ve learned more, I’ve started to take a moment to reflect on some of the things I have learned. I think that’s a great way to learn about the value that goes with the investment decision.
I think that is a great way to learn about the value that goes with the investment decision.
If I were to make an investment decision I would want to know what I’m getting myself into. I would want to know what the financials look like when the investment is made. It helps me make a decision that is in the long-term best interest of myself and my family.
The idea that you would want to know the costs is a common one among people investing in mutual funds. Just as you want to know the long-term return of your 401(k) or IRA, you want to know when the investment is made how much will be left on the balance sheet. What do you think the chances are that you will end up with a negative return? I’m one of those people who thinks that I’m better off taking the cash and running.
I’m not saying that I think you should invest in mutual funds, but I do think you should know the long-term implications of your investment decisions. Having the ability to know these things in advance makes it much easier to make sound decisions.
I think the difference between a person who says “I think I’ll pay an annual tax rate of 5% on my investment income” and a person who says “I’m going to get a return of 5% on my investment income” is that the one who says “I’ll pay an annual tax rate of 5% on my investment income” is making a decision to invest money that is not likely to be a long-term gain.
I think that if you invest in stocks (or other common investments like real estate, commodities, or bonds) and your portfolio grows, you will be able to get a nominal return on your investment. That is your expected return when you buy the stock or real estate or commodity or bond at the market price. For example, if a company has a stock price of $100 and you invest in it, you will get a $100 return on your investment.
This is a similar approach for a pension fund or 401k plan. If you own real estate or other common investments that you don’t expect to grow, you may get a very low return on your investment. At the very low end of the spectrum, if you own a home, if you choose to rent, if you own stocks, and if you decide to buy a stock, there is no sure thing that your investment will be worth more than zero or zero.
That’s true in the stock market. If your investment is worth zero, you probably don’t need to buy any more shares. In fact, you should be buying the stock of the company that the shares belong to. There is nothing to gain by owning shares that do not match your investment.
