When it comes to investing your money, one of the first questions most people ask is: “What kind of return should I expect?” It’s a simple question with a surprisingly nuanced answer.
Whether you’re saving for retirement, a house, or just trying to make your money work harder, understanding what a good return on investment looks like will help you make smarter decisions — and avoid chasing unrealistic gains that come with unnecessary risk.
Let’s break it down.
What Is ROI, Exactly?
Return on investment (ROI) is simply how much you earn (or lose) on your money, expressed as a percentage. If you invest €1,000 and it grows to €1,100 in a year, you’ve earned a 10% ROI.
What Kind of Returns Can You Expect?
Here’s a quick snapshot of average annual returns from various types of investments:
| Investment Type | Average Annual Return |
|---|---|
| Savings Account | 0.5% – 2% |
| Government Bonds | 2% – 4% |
| Corporate Bonds | 4% – 6% |
| Real Estate | 7% – 9% (incl. appreciation and rental income) |
| Stock Market (Index Funds) | 7% – 10% (long-term average) |
| Southern Cross Investments | 9.8% return |
| Individual Stocks | Varies widely (can be 0% or 100%+) |
| Private Equity / Startups | 15%+ (high risk, high reward) |
Savings Accounts (0.5% – 2%)
Savings accounts are the most accessible and safest place to keep your money, but they offer very low returns. Even high-yield savings accounts typically top out around 2%, which often doesn’t keep pace with inflation. The upside? Your money is liquid and insured (up to €100,000 in Ireland under the Deposit Guarantee Scheme). Savings are great for your emergency fund or short-term goals, but not ideal for long-term wealth building.
Government Bonds (2% – 4%)
Government bonds, like Irish or U.S. treasury bonds, are considered very low-risk investments. You’re essentially lending money to the government in exchange for regular interest payments. While they’re more stable than stocks, the returns are modest. These can play a useful role in a balanced portfolio, especially for conservative investors or those closer to retirement looking for capital preservation and predictable income.
Corporate Bonds (4% – 6%)
Corporate bonds work similarly to government bonds, but instead, you’re lending money to a company. Because companies carry more risk than governments (they can go bankrupt), they tend to offer higher interest rates. High-quality (investment-grade) corporate bonds are relatively stable, while “junk bonds” can offer higher investment returns but with significantly more risk. They can provide a nice middle ground between equities and ultra-safe options like government bonds or savings accounts.
Real Estate (7% – 9%)
Investing in property — either through direct ownership or REITs (real estate investment trusts) — can generate both rental income and capital appreciation. The returns can be strong, especially in growing markets, but real estate comes with its own challenges: high upfront costs, ongoing maintenance, and the risk of property value dips. That said, it’s a popular choice for building long-term wealth and diversifying beyond stocks and bonds.
Stock Market / Index Funds (7% – 10%)
Over the long term, the stock market has historically returned around 7%–10% annually. Index funds — which passively track the market (like the S&P 500 or MSCI World) — are a simple, low-cost way to access this growth. They’re ideal for investors who want to benefit from market performance without trying to pick individual stocks. The key is staying invested through the ups and downs; short-term volatility is normal, but long-term growth has been remarkably consistent.
Southern Cross Investments (9.8%)
Southern Cross Investments provides investors with a steady rate of return of 9.8%. Investments are deployed across long term, prime real estate backed loans, allowing for a steady rate of return. Coupled with the diversification provided by Southern Cross (by asset class – real estate and by geography – Australia) it’s a great option to build out your portfolio with.
Individual Stocks (Varies Widely)
Investing in individual companies can be exciting in terms of a good return on investment — and sometimes lucrative — but it’s also risky. While some stocks can double or triple in value, others can crash or stagnate for years. Unless you have time to research thoroughly and accept the possibility of losses, individual stock picking is usually best kept as a smaller slice of your portfolio. For most people, broad market exposure through index funds is safer and less stressful.
Private Equity / Startups (15%+ with High Risk)
Investing in startups or private companies (either directly or through funds) can yield incredible returns — but it’s high-risk, high-reward territory. Many startups fail, and your money can be locked up for years with no guarantee of a return. This type of investing is typically reserved for experienced investors or those with disposable capital and a strong tolerance for risk. It’s not where you put your rent money — but for some, it’s a high-risk moonshot worth taking.
So, What’s a Good ROI?
A good ROI depends on your risk tolerance, investment horizon, and financial goals — but here are some general benchmarks for the average investor:
- A well-diversified portfolio (mix of stocks, bonds, and maybe real estate) can reasonably aim for 6%–8% annual returns over the long run.
- If you’re very conservative, sticking to bonds and savings accounts might get you 2%–4%, but that often doesn’t beat inflation.
- Aggressive investors might push for 10%+ by leaning into stocks, startups, or crypto — but that comes with volatility and higher chances of loss.
Why “Beating Inflation” Is the Minimum Goal
Inflation (currently averaging 2–3% in many developed countries) slowly erodes the purchasing power of your money. So if your investment earns 2%, but inflation is 3%, you’re actually losing money in real terms.
That’s why many advisors say the baseline goal should be at least 4%–5% after inflation, or roughly 6%–8% in total.
The Power of Compounding
Even if 6% doesn’t sound exciting, it adds up over time:
- Invest €10,000 at 6% annual return
- After 10 years: €17,908
- After 20 years: €32,071
- After 30 years: €57,435
Let your money work while you sleep — that’s the magic of compounding.
Final Thoughts: Set Realistic Expectations
The key to smart investing is consistency and patience. Chasing 20%+ returns might sound appealing, but it usually comes with a side of sleepless nights and big drawdowns.
For most people, aiming for a 6%–8% return across your portfolio is a realistic and solid goal. Diversify, stay the course, and don’t panic when the market dips — because it will, and then it’ll climb again.