How to work out what financial return you require

Financial return on your investments is ultimately what virtually all investors are looking for, otherwise there is no need to invest and the money may as well just be left in the bank account. And indeed that is the first point here: the financial return you look for should be capable of beating whatever the interest rate would be if you simply just left the money in the bank.

And indeed you should also aim to try and get a better return than would be the acse with a gilt, which are safe investment compared to most forms of investment because they are issued by the government, and tend to have a more attractive interest rate than a bank account.

Inflation is another factor to beat; when there is significant inflation it is often the case people's money actually falls in real terms despite receiving interest on their bank balances, because inflation outstrips the rate of interest. So you'll want to stay ahead of inflation.

Finally, you will want to beat the average divided percentage paid out by the FTSE, and this averages around the 4% mark or just under. Some financial experts suggest looking for a return of anywhere between 6 - 8% a year on their money as being realistic and hopefully at least allowing the investment to keep pace with the rate of inflation which has been on average around 6% for over 40 years.

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How to work out what financial return you require

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