We can put together a portfolio that includes both risky and risk-free investments. We can build portfolios to lower our investment risks and boost our returns.
A good return on an investment in stocks is, according to conventional wisdom, one that is at least 7% annually. Inflation-adjusted, this also concerns the S&P 500's average annual return. Your return may be higher in some years because this is an average; They might be lower in some years.
Data: Weight of Real Estate Asset in Portfolio = Weightage 1 = 10% = 0.10 Weight of Low-Quality Bonds in Portfolio = Weightage 2 = 15% = 0.15 Weight of AT&T Stock in Portfolio = Weightage 3 = 25% = 0.25
Weight of Savings Account in Portfolio = 50% = 0.50
Sum of all weights in Portfolio = 1 Return of Real Estate Asset in Portfolio = Return 1 = 15% Return of Low-Quality Bonds in Portfolio = Return 2 = 14% Return of AT&T Stock in Portfolio = Return
Returns on risky investments are higher than those on risk-free investments.
To learn more about risk-free investments here:
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