Be careful when asking for financial advice on the internet. A lot of people treat investing like it’s a casino.
As with most things in life, it depends. Two people at different stages of life and career might evaluate the same investment drastically differently, against the criteria of their own priorities.
Years ago, I read the Bogleheads’ Guide To Investing which thoroughly discussed, among other things:
- Why people pursue investments in the first place
- The juncture of: time, income, financial timelines, and financial priorities
- How doing almost nothing (index funds) can and does outperform active mutual funds; KISS
- Success criteria, aka not running out of money in retirement
Needless to say, most everyone would prefer a higher rate of return. But the caveat is how much it will cost. Some higher rates of return are almost without cost, such as switching from a brick-and-mortar savings account (0.01% APY) to an online savings account (~4.30% APY). This is almost a no-brainer.
Other investments have fantastic returns but have opportunity costs: buying into large infrastructure can pay huge dividends but take decades to become profitable, tying up the money and sometimes nearly bankrupting the Earl of Grantham. Even still, this could be advisable when viewed in the long-term.
Likewise, some investments have a paltry rate, but carry (almost) no risk of missed payments. Someone looking for a income later in life might be fairly pleased to have a steady stream of inflation-adjusted money.
Even corporations and governments evaluate investments differently than people, since corporeal legal entities aren’t mortal and death is optional. Indeed, investment priorities are a lot different for sovereign entities, which cannot declare bankruptcy precisely because of their power to raise taxes.
I hope these examples show that the qualities of an investment – independent of quantitative measures like return rate or revenue per share – can be “good” in different ways.
Over a lifetime, 7% to 8% is a good return. If you are safely building a portfolio, and looking at year over year, then anything between 8% and 12% is pretty good. If you are closer to retirement or just more risk averse, then around 5% to 7%. Really, anything above inflation means you are making money.
Everyone is going to have different definitions of “good.” It all depends on your goals, risk aversion, and stage of life. Your best bet is to find a financial advisor who can tailor a plan to your needs.
It depends on how long you are investing for.
Per year you need to beat the rate of inflation. If you don’t at least match the rate of inflation you lost money. But four percent higher is pretty by good. Not based not great but pretty good
Anything at least 2 points higher than the best rate of return you are getting now.
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