Welcome to Ameritrade Plus University
investing 101Aiming for a realistic return
Aiming for a realistic return
Identifying your real risks
Putting together the right portfolio
The psychology of investing
Investing for growth
Seven questions to ask before buying a growth stock
How to spot value
Selecting stocks for income
How to buy bonds
Preferred shares: uncommon values
Convertibles: the best of both worlds
Closed-end funds: their time will come again
The right way to use stock options
Mergers and acquisitions
Frequently asked questions I
Frequently asked questions II
Stock screener

Take the quiz
The Sivy 100
About Investing 101

An interactive course for managing your finances


Setting reasonable goals increases your odds for long-term success

Nobody wants to risk big losses -- but everybody wants big profits. The key to successful investing is balancing risk against potential return. If you overreach, you could suffer a setback so crushing that you never fully recover. On the other hand, if you try to avoid all risk, you'll earn less than a fair return.

What should you be aiming for? The first place to look for guidance is the long-term historical record. Including dividends, the S&P 500 has provided a median return since 1926 of about 12 percent a year. Over various five- and 10-year stretches, those returns generally average somewhere between 8 and 15 percent, at most. The 20 percent-plus annual gains of the later 1990's are very rare.

To reach your goals, you don't necessarily have to beat the market all the time. If you earned even three-quarters of the S&P 500's gains, you're way ahead of the historical averages. What's more important is to avoid the risk of a disastrous loss.

Individual investors can achieve that goal by putting together a diversified portfolio built around a large core of blue-chip growth stocks. Those are the shares of companies with sales and market capitalization of at least $5 billion, strong balance sheets and projected earnings and dividend growth that will support a total return averaging at least 12 percent a year. This website provides a list of 100 such stocks, along with key data.If you average at least 12 percent annually, you'll double your money every six years -- and multiply it 16-fold over the next 25 years.

Identifying your real risks >>


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