The best investments for a 10 percent return on investment or better

What are the best investments for a 10% return on investment or better?

The best investments include index funds, dividend stocks, real estate, websites, flipping products for profit. High-interest debt repayment can also be a worthwhile investment. Each of these investments are proven to be able to hit 10% ROI or better.

Imagine, investing enough money that your returns made more money than your day job. Maybe you only make $50k per year, but your dividends are paying you $60k.

Investing is always slow in the beginning. However, due to the power of compound interest, your investments can build wealth for you. 

Luckily for you, I’m going to show you some of the best investments for 10% ROI. Make smart choices and you can hit 10% or better!

20-079 - The best investments for a 10 percent return on investment or better

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What is a realistic rate of return on investment?

10% return on investment is a very realistic return on investment. Generally, the S&P 500 has returned an annualized return of 10%. However, when planning for retirement it may be wise to estimate 7 or 8 percent for conservatism. Investments outside of the stock market (e.g. Real Estate) may lead to even higher returns.

However, you can get better rates of return by managing your own investments. Ideally, you would start small because learning investment strategies take time. You want to learn what you can while minimizing risk.

You may be able to get higher returns on investment depending on your investment strategy. For example, real estate builds equity, provides cash flow, and appreciates in value over time. Therefore, a real estate investment may provide a higher rate of return.

How do you get a 10% return on investment?

A 10% return on investment is achieved by investing consistently for the long-term. Most Investments will have up years and down years, but long-term investments typically balance out. Therefore, it is important to keep a long-term outlook on your Investments.

Most historical return on investments are stated in annualized returns. Essentially, it is a statement that the past timeframe averages out to a certain return on investment.

For example, let’s say an investment has the following yearly returns:

Year 1 – 10%

Year 2 – 20%

Year 3 – 3%

Year 4 – 7%

Year 5 – 12%

The five year annualized return would be 10.4% or the average return over the five years. You should not expect to get a 10% return each year. Instead, know that the typical return over the time frame averages out to 10%.

The longer you play the investing game, the more even keel your investment returns will be. Look to invest for the long-term and continually add money to your investments on a regular basis.

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Is 10 percent a good return on investment?

10 percent is considered a good return on investment for individual investors. However, there are many other investments which can outperform or underperform a 10% ROI. Unless you are actively managing your investments then aiming for a 10% ROI is a good goal.

Generally, most investors focus on a 10% return on investment because of the S&P 500. The S&P 500 is an index which tracks the top 500 companies in the US. Historically, the S&P 500 has an annualized return of 10%.

S&P 500 index

So when focusing on a 10% investment, we are really focusing on beating the market average. Most people don’t even try to beat the market average. Instead, most investors will happily take a 10% ROI to invest in a safe index like the S&P 500.

However, an experienced investor can beat the market average. You can do better than a 10% return on investment.

So why aren’t more people trying to get a better return?

Most individuals lack the knowledge and effort to manage their own Investments. Choosing a simple S&P 500 index fund is easy and requires little to no thought. Most people know that a boring index fund will grow over time without effort on their part.

The best investments for a 10 percent ROI

Some of the best investments include index funds, dividend stocks, real estate, websites, flipping products, and paying off high-interest debt. Any of these Investments should be able to get you a 10% return on investment or better. 

Index fund investing

As previously mentioned, Index Fund investing is one of the most simplistic ways to reach a 10% ROI. Most investors will choose Index Fund investing because it’s easy and the traditional route. Knowing how to invest your money into index funds can build wealth over time.

Most new investors should consider themselves an S&P 500 Index Fund. For example, Vanguard offers VOO which tracks the performance of the S&P 500. Currently, VOO has a 13.7% annualized return over the last 10 years 

However, there are plenty of other index funds which have a historical performance over 10%. Therefore, you can browse Vanguard’s list of ETFs and invest in ETFs with a good performance history. You should know, past performance does not guarantee future results.

Growth index funds generally have a good performance above 10% ROI. For example, VUG has a 16.7% annualized 10 year return. MGK has a 17.3% annualized 10 year return.

Dividend stock investing

Dividend stocks can have a good rate of return because they can appreciate and pay dividends. Therefore, if your dividend stock appreciates 9% but they pay a 3% dividend then your total return is 12%.

Real estate investing

Real estate can provide an amazing return for investors willing to take risks. Most millionaires were made through real estate because you can borrow money you don’t have. Therefore, you can get an amazing return on investment by finding the right real estate deal.

Look at this way. Let’s assume you are going to buy a piece of Real Estate for $200,000. You can finance this deal through your bank while paying a 20% down payment.

Now, let’s assume you were renting this place for $1,200 per month. After all planned expenses, your investment has a cash flow of $200 per month. Remember, this is $200 not going towards expenses so you can reinvest it if it makes sense.

In one year, your $200 per month is $2,400. Because you only paid 20% down your return on investment is now at 12% [=$2,400/$20,000)*100].

However, the value of your home may also appreciate. According to Zillow, the estimated home value across the United States will increase by 7% in 2021. Therefore, your return-on-investment is now at 19%.

But wait, there’s more! The renter is also paying off the mortgage which is building equity into your investment.

The amount of equity will depend on your loan and how much of the home is paid off. Let’s assume you are getting $100 in equity per month. Another 6% return on investment is added due to equity, coming to a total of 25%.

Every real estate situation is different. You can invest in traditional real estate, have a property manager, or rent property out on AirBnB. Alternative Investments include Real Estate Investment Trusts (REITs) and real estate crowdfunding.

Buying profitable websites

Buying websites are an amazing source of income if you know how to run them. Every single day people are selling websites which are already profitable. Luckily for you, websites have a low cost of maintenance with high profit potential.

Browsing Flippa, I was able to find a website for sale with an asking price of $20,000. This website is already making $1,000 per month.

Flippa website buying and selling

Buying this website as is would generate $12,000 per year. Therefore, you would have an amazing return on investment at 60%!

Best of all, websites are generally easy to maintain. Therefore, this website can generate you $12,000 per year with very little effort. Talk about passive income!

Flipping products for profit

Most rich people understand that working a day job does not make you rich. Selling products and investing well can make you rich. Luckily for you, you don’t even have to go far to find products you can sell.

Yep, you don’t even have to make a product. You just need to find the right product to put in the right marketplace.

Imagine, going to your favorite stores and raiding the clearance rack. You can sometimes find amazing deals 40, 50, and even 90% off! 

You can then sell these items on Amazon, eBay, Mercari, Poshmark, and many more sites! Thousands of people are doing this everyday. The process is called Retail Arbitrage.

But does Retail Arbitrage actually work?

Absolutely! However, you will need to put in the work to find items, list them, and ship them out in a timely manner.

For example, I once found dog treats that were selling at Grocery Outlet for $1.99 per pack. These treats were then selling on Amazon for around $3. Amazon took their cut which probably put my overall cost to be close to $2.50.

For every pack sold, I would earn around $0.50 or 25% return on investment. I know what you’re thinking, who cares about 50 cents? 

I did! There was no way I could keep the Amazon store stocked with these treats. It didn’t matter that the profit margin was only $0.50 when the product flew off the shelves.

Paying off high-interest debt

High-interest loan or debt is a negative return on investment. Simply paying off any debt with a high interest rate is giving you an amazing return.

For example, owning a credit card with an 18% interest rate. You are losing money every month that you pay interest on this debt. Make it a priority to pay it off ASAP!

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Summary: The best investments for a 10 percent ROI

As you can see, there are many ways to get a 10% return on investment or better. The most common include index funds, dividend stocks, real estate, websites, flipping products for profit. However, paying off high interest debt can be the best return on investment.

Realistically, most investors see a return on investment around 10%. Although your investment returns will depend on your investment strategy.

Real estate has been the chosen vehicle to wealth for many millionaires. You can invest with other people’s money while earning cash flow, equity, and appreciation. However, real estate can take a lot of time and effort.