Stock Market Average Rate Of Return
Understanding the Stock Market Average Rate of Return and the historical stock market rate of return is based on just comprehending exactly what the rate or return (ROR) / return on investment (ROI) means. This is defined as the ratio of money earned (gained) or lost on a stock relative to the total amount of money or capital invested in that particular stock. The total money earned can be in the form of interest, dividends, cash profit or loss and net income or loss. The total money invested is known as the asset, capital, principal, or the cost basis of the investment in the stock. A prime example is a $1,000 investment that earns only $50 in interest over a period of time may generate more capital or cash than would a $100 investment that earns only $20 in interest over the same time period. However the fact is that the second investment has yielded a 20% ROR ($20/$100) while the primary investment has yielded only 5% ($50/$1,000). Where there is a loss in the market there can also be a negative ROR.
The whole premise of understanding this in the stock market is based on historical data. The Dow Jones stock market average rate of return over the last 10 years has been on the downturn. With the stock market fluctuating as the Fed continues to toy with interest rates has left the US economy in shambles leaving speculators to determine which way the market goes. This means that the market has been left to the mercy of short profit takers that have no joy in scraping the market.
To locate the stock market average rate of return and the historical stock market rate of return you must decide the period at which you are looking. As a more long term investor you will want to look on a period of say 10 years and if you are a short term investor you can look on anywhere from 3 months to 1 year. There are really three indices that can assist you in this search. The first is the Dow Jones Industrial Average, the NASDAQ and the S & P.
Dow Jones Stock Market Average Rate Of Return
NASDAQ Stock Market Average Rate Of Return
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