RATE OF RETURN [RoR]: Investments 2022?

By Staff Reporters

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DEFINITION: A rate of return (RoR) is the net gain or loss of an investment over a specified time period, expressed as a percentage of the investment’s initial cost. When calculating the rate of return, you are determining the percentage change from the beginning of the period until the end.

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And so, according to Greg McBride CFA, before you invest your money, you’re likely wondering how much you’re going to earn. This is known as the rate of return. The rate of return is expressed as a percentage of the total amount you invested. If you invest $1,000 and get back your original investment plus an additional $100 in interest, you’ve earned a 10 percent return.

CITE: https://www.r2library.com/Resource/Title/082610254

However, numbers don’t always tell the full story. You’ll also need to think about how long you plan to keep the money invested, how your investment options have performed historically and how inflation will impact your bottom line.

Key return on investment statistics

When you’re trying to get the best return on your investment, you’ll likely start combing through loads of data. A good place to start is looking at the past decade of returns on some of the most common investments:

  • Average annual return on stocks: 16.63%
  • Average annual return on international stocks: 7.39%
  • Average annual return on bonds: 3.05%
  • Average annual return on gold: -0.21%
  • Average annual return on real estate: 11.72%
  • Average annual return on CDs: 0.40%

CD rate data is from internal Bankrate averages.

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ECONOMICS: https://www.msn.com/en-us/money/realestate/from-real-estate-to-inflation-heres-what-to-expect-from-the-economy-in-2022/ar-AASbBHN?li=BBnb7Kz

MARKETS: https://www.msn.com/en-us/money/markets/stock-market-outlook-were-going-to-get-an-explosion-to-the-upside-in-january-strategist-says/vi-AASbBih

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COMMENTS APPRECIATED.

How have you done so far in 2022?

THANK YOU

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Thank You

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Can Doctors Trust the Stock Market [Video]?

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More on MoneyScripts

By Rick Kahler MS CFP http://www.KahlerFinancial.com

Rick Kahler CFPIf you keep your life savings in certificates of deposit or a savings account at your local bank, that decision may be based on a common money script: “You can’t trust the stock market.”

This belief about money can keep you from making the most of your retirement savings.

Money Scripts

I was recently interviewed by Clark Palmer for a Bankrate article about money scripts. Palmer did quite a good job of explaining money scripts, the largely unconscious beliefs about money that we all hold and that affect our behavior around money. Many of these scripts are developed in childhood. Typically they are only partially true, but sometimes we follow them rigidly even in circumstances where they are not accurate. This usually doesn’t serve us well.

Clark Palmer Speaks

In describing the problems with adhering to rigid money scripts, Palmer made this statement: “For instance, distrusting the stock market would have made a lot of sense after the economy collapsed. Since the stock market has rebounded in the past few years, it no longer makes as much sense to distrust the stock market.”

This example actually replaces one money script: “You can’t trust the stock market,” with another: “You can’t trust the stock market in poor economic times, but you can trust it when the economy is doing well.”

This second script sounds like a recipe for exactly what many investors did during the recent recession. When the market crashed in 2008, they sold stocks, taking huge losses in order to move their nest eggs out of the frightening world of the stock market and into CD’s or money market funds that seemed more trustworthy.

Missed Opportunities

Yet, by getting out of the market, they missed the opportunity to have their holdings regain value as the market recovered. Their savings earned safe but meager returns and didn’t decline further in value, but they did lose purchasing power by never regaining their losses. Now, with the market back up and appearing more stable, it seems worthy of trust again, so some of these same investors are buying stocks. The trouble is, they are now paying a premium to get back into that “trustworthy” high market.

Does this mean the first money script, “You can’t trust the stock market,” is true after all?

Not at all.

What you can’t do is trust that the market will always go up. You can’t trust that it will always go down, either. You can’t trust stocks that provided high returns over the past ten years to do the same in the upcoming decade. You can’t trust investors to make decisions about buying and selling in logical ways based on economic principles—partly because many of those decisions are based on money scripts.

Gurus of the Moment

Nor can you trust yourself or anyone else to successfully time the market, buying at just the right low point or selling at the perfect high. This is true even though there is usually a “guru of the moment” who manages to do exactly that through sheer luck.

What you can trust is that the stock market will do what it has always done. It goes up and down in response to a complex set of economic, emotional, and political factors. The way to trust the stock market is to accept the reality of what it is.

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Assessment

Here, then, is my suggestion for a more accurate money script about the market: “You can trust the stock market to do what it does, which is fluctuate.”

This is why the wisest strategy for most investors is to trust the market over the long term with a well-diversified portfolio.

VIDEO LINK: https://www.youtube.com/watch?v=KcjUbzRwKj8&x-yt-ts=1422411861&x-yt-cl=84924572

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Conclusion

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Got Cash Money in the Bank?

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Is it Really a Long-Term Investment?

By Rick Kahler CFP® http://www.KahlerFinancial.com

Rick Kahler CFPGot money in the bank? Of course, that’s a good thing.

But, more than a fourth of Americans think the best long-term investment strategy is money in the bank. However, that may be a bad thing!

So, what about medical professionals; and what is a doctor to do?

The Bankrate Survey

Here is the rather discouraging result of a July survey by Bankrate. One of its questions was, “For money you wouldn’t need for more than 10 years, which one of the following do you think would be the best way to invest the money?”

Cash was the top choice at 26%, followed by real estate at 23%. Sixteen percent of the respondents chose precious metals such as gold. Only 14% would put their long-term investment into the stock market, and just 8% thought bonds were the best choice.

Head-on-Desk Syndrome

Doh! That thumping sound you hear is me banging my head on my desk.

I assume those who opted for cash did so because keeping money in the bank seemed to be the safest choice. For long-term investing, however, that safety is an illusion. The best and safest place to put your nest egg for the future is not in the bank, but in a well-diversified portfolio with a variety of asset classes.

Here’s why:

Savings accounts and CDs are safe places to store relatively small amounts of cash that you expect to need within the next few months or years. The funds are protected by insurance. You know exactly where your money is, and you can get your hands on it anytime you want.

Short Term Stability

This short-term safety does not make the bank a good place for money you will need for retirement or other needs ten years or so into the future. It may seem like safe investing because the amount in your account never goes down. You’re always earning interest. Yet, over time, that interest isn’t enough to keep pace with inflation. The purchasing power of your money decreases, which means you’re actually losing money. It just doesn’t feel like a loss because you don’t see the loss in value.

Stock Markets Fluctuate

In contrast, the stock market fluctuates. The media reports constantly that “the DOW is up” or “NASDAQ is down,” as if those day-to-day numbers matter. This fosters a perception that investing in the stock market is risky. Combine that with the scarcity of education about finances and economics, and it’s no wonder that so many people are afraid of the stock market and view investing almost as a form of gambling.

Wise long-term investing in the stock market is anything but gambling. Instead of trying to buy and sell a few stocks as their prices go up and down, wise investors neutralize the impact of market fluctuations by owning a vast assortment of assets.

A Dual Strategy

This is accomplished with a two-part strategy.

1. The first is to invest in mutual funds rather than individual stocks. With just one mutual fund that invests in an index of stocks, you might own thousands of different companies. Your hard-earned fortune isn’t dependent on the fortunes of just a few companies.

2. The second component is asset class diversification. An asset class is a type of investment, such as U. S. and International stocks, U. S. and International bonds, real estate investment trusts, commodities, market neutral funds, Treasury Inflation-Protected Securities, and junk bonds. Ideally, a diversified portfolio should include nine or more asset classes.

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MD Retirement planning

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Assessment

By holding small amounts of a great many different companies and asset classes, you spread your risk so broadly that the inevitable fluctuations are small ripples rather than steep gains or losses. As some types of investments decline in value, other types will be gaining value. Over the long term, the entire portfolio grows.

And, in the long term and for most medical professionals, investing this way is usually safer than money in the bank.

Conclusion

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