How long does it take to make money from your investments?
A new study from Audience Capital finds that even a small investment can make a lot of money for someone, especially if it’s a low-risk investment like a stock or bond.
The study, published Monday by the Wall Street Journal, looks at the earnings of individuals and companies with a portfolio of assets worth $1 million and $50 million.
The report estimates the average annual return for those investments is $2.3 million.
For the study, Audience uses a formula to calculate the expected return of a given portfolio of stocks and bonds.
For the sake of simplicity, Audiences uses the average earnings of the five companies that participated in the study.
The average returns were calculated based on a sample of about 7,600 individual investors who were active in the stock market between 2010 and 2018.
They were told the average return was based on their individual performance.
Audience says these results are based on the average of the investors’ performance in three broad areas: capital efficiency, risk tolerance and earnings per share.
The analysis, based on this analysis, was designed to determine how much of a return each investment was likely to give to a person or company, Auditors says.
Audiences research shows that if you invest in high-risk, high-reward stocks and have a risk tolerance of 10%, you’re likely to earn more than $50,000 in annualized earnings per year, and in a 30-year time horizon, you’re looking at an annualized return of more than 300%.
For the most part, investors who have risk tolerance values between 10% and 20% are more likely to see significant returns, Audites says.
For more on the Wall St. Journal’s study, click here.
What makes this report interesting is that the average returns for these five companies were well above the median.
For example, the median return for the S&P 500 index was less than 10%.
For the sake and convenience of this analysis only, the average investment returns were divided into five components: capital, risk, performance, income and earnings.
The components are weighted equally.
The results show that investing in high return stocks with risk tolerance is a great investment strategy for most individuals, Auditing said.
It may not pay as well as the other high return investing strategies, but the investment returns are high enough that it is more than worth the investment.
For a complete analysis of the study by Auditing, click on the link above to read the entire article.
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