According to the traditional standards in investment, an annual ROI of 7% or greater is considered a good ROI for an investment in stocks. Generally speaking, a good investment is one that gives you the highest possible return on your money, with due diligence on the research you can find in any given asset class. Now recognizing good investment for yourself is all dependent on your risk tolerance, financial goal and also gives you a return on your money.
There are two main risks with stocks:
Volatility:
Stock prices may swing up or down over a short period of time creating room for you to sell or hold your stocks at that time.
Permanent losses:
Sometimes businesses fail due to some known and unforeseen reasons, and when these companies go bankrupt stockholders get what is left… if there’s anything left.
Ways to avoid permanent loss is to own a diversified portfolio and also if you’re retiring in a few years you’ll also need to manage your volatility by moving your money into more bonds and cash for steady growth for you to avoid erratic movement of the market.
