How to Make 10% Annual Returns in the Stock Market
So how can we achieve a risk free 10 percent annual return from the stock market?
You must first see the bigger picture of the stock market.
As promised I’m going to share with you my profitable investing experience that’s helped me consistently profit from the stock market.
I learned the secrets the hard way by experiencing a lot of mistakes and failures and now I’m sharing it with you because I don’t want you to make the same mistakes as I did.
And more importantly I want you to succeed.
Now let’s take a look at how the stock markets performed in the last 30 years.
Over the last period of 1986 to 2018 the stock market’s value has increased by over 1000 percent.
For example if you’d invested in the Dow Jones 30 years ago your investment would have grown by more than thirteen hundred percent!
This is just a simple estimation.
In fact your annual return would have been a lot higher than 1800 percent.
That’s because you would have earned a lot more thanks to the compound interest and you’d also receive dividends from your investment.
As you can see on thus chart the stock market’s value went up and down over time.
There were some years that the stock market’s value went up and there were some years that the markets value went down.
But if you notice over the long term the stock market would always keep increasing in value.
The profitable investing experience is that the stock market is very volatile in the short term, but in the long term it will always keep going up in value.
Still don’t believe?
Now let’s see the five year performance of the S&P 500 index…
As you can see in the chart the stock market was very volatile.
Its value went up and down over time.
And that simply means if you invest in the short term you’ll likely take more risks.
When I first started I only looked for short term investments because I was not patient.
I was clueless about what was going to happen — and that’s why I failed and lost all of my hard earned money.
In fact we have no idea about what’s going on with the market.
But if you notice, over the long term the stock market will always keep increasing in value.
If you’re invested in the S&P 500 just five years ago you would have been able to grow your money by nearly 90 percent.
That would have been an easy seventeen point eight percent return every year just to buy and hold your investment.
Still not a believer?
Now let’s take a look at some random companies.
For example Amazon as you can see this company’s stock is very volatile.
The stock price went up and down over time and the price fluctuation ranges somewhere between $50 and $200 a share for some time.
That is to say if you buy and sell this stock without a real strategy, chances are you’ll potentially lose hundreds or thousands of dollars in just a few days or weeks.
And now Amazon stock sits at over $1500 per share, so you can begin to see that long term is where the great gains are to be made in the stock market.
The fact is, we just don’t know what will happen next with the stock market. Not day to day, week to week, anyway.
But if you notice over the long term this stock will likely keep going up in value.
If you’d invested in Amazon five years ago and invested for the long term, you would have grown your investment by more than 1000% percent.
You could have doubled your money in just five years and made five hundred dollars a share in profit.
You see by knowing a simple truth you can make almost all of your investments become profitable.
That’s why people who know how to invest are always richer and wealthier than people who don’t know how to invest.
Now let’s take a look at another example VISA this company stock price also went up and down over time.
But over the long term it would always keep increasing in value.
If you’d invested in Visa five years ago you could have easily made over 50 percent return every year from your investment.
OK another example, is Google.
Similar to Amazon this company’s stock is also very volatile.
The price fluctuation range is somewhere between 50 and 200 dollars a share. But is now up to over $1200 a share!
It would be really risky if you invest in this stock for a short term.
You may lose a lot of money when the price fluctuates but if you invest for the long term, you can easily eliminate the risk and make your investment profitable.
Five years ago you could buy Google stock at about $300 a share and now its value has grown to more than twelve hundred dollars a share.
And this simply means if you had invested in Google five years ago you would have made over nine hundred dollars a share easily and effortlessly.
The next example, the Home Depot, despite the fact that this company stock price went up and down every day its value would always keep increasing over the long term.
If you’d invested in this stock five years ago you could have easily made over 53 percent return every year from your investment.
The same for Facebook even though its stock price fluctuated wildly over time.
This company would keep increasing in value over the long term.
If you’d invested in Facebook you could have tripled your money in just five years.
OK another example.
Nike as you can see on the chart this company has value has grown by 146 percent in the last five years.
If you’d bought and held Nike five years ago you would have made him more than 29 percent annualized return from your investment.
Still not a believer yet?
Now let’s take a look at another example Papa John’s International.
This is of value stock that I’ve recently purchased.
As you can see on the screen even though Papa John’s is a great company its stock is very volatile.
The stock price went up and down over time.
But if you notice over the long term the stock would always keep going up in value.
If you’d invested in this company five years ago you could have grown your investment by over four hundred percent.
And this simply means you could have multiplied your money by four in just five years.
Without trying too hard to beat the market.
One more example.
TXRH or Texas Roadhouse.
This is a good company that I’ve recently purchased and many of my students also bought the stock and made some good profits from.
As you can see on the chart even though the stock price went up and down over time the stock’s value would always keep increasing over the long term.
If you’d invested in TXRH five years ago you would have been able to make over 46 percent return a year on your investment.
And this simply means that you could have doubled your money in just five years without taking high risks or trying too hard.
Hope you are now a believer in the growth of the stock market as a whole over time, as well as those companies that have increased their share price many times over.