Definition of Investment Success Broad, But Many Focus on Performance


Most of us take some type of risk every day. However, risk is very subjective. When it comes to investment risk, many factors come into play as to how much we are willing to accept. Age, current financial situation, etc., all play a role as to how much risk we are willing to accept when it comes to our money.

With this in mind, we posed the following question to our readers:

“What would you do if you could increase your chances of improving your investment returns by taking more risk.”

Here are the results:

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An overwhelming percentage–87% to be exact–said they would be willing to take on additional risk in order to improve their investment returns. Only 13% said they would be unlikely to take on more risk in order to improve their investment returns.

Among those willing to take on more risk, however, the degree to which they would do so varied. Slightly more than half (51%) of respondents said they would be willing to take on a little more risk with some of their money. Another 28% said they would take on a lot more risk with some of their money. Only 2% were the most aggressive, saying they would take on a lot more risk with all of their money.

Weekly Special Question

Each of us probably has our own definition of “success,” whether that be professionally, financially, or in any number of other categories. To get a better idea of how our readers define investment success, last week’s special question asked just that: “What does investment success look like to you?”

In all, 275 people answered the question and, as we expected, the answers ranged from the broad to very specific. Furthermore, their definition of investment success was as diverse as the investment marketplace itself.

While we did get a variety of responses, there were a few recurring themes underlying many of the responses.

At the top, over 22% of respondents offered some specific minimum performance figure that they used as a measuring stick for investment success. Of those that gave specific performance figures, nearly 46% said they defined investment success as achieving returns of 6% to 10% a year. Roughly a quarter said that returns between 4% and 6% a year defined investment success, while 6.6% said returns in excess of 15% a year were required to be “successful.”

Out of the 275 readers who responded, almost 10% said their definition of investment success meant limiting their losses or preserving their capital. Lastly, just over 5% said that consistently beating some market index was their definition of investment success.

Here is a sampling of the responses:

  • “Being smart enough to recognize when you don’t need to take any more risks. That is, ‘When you’ve already won the game, it is no longer necessary to play.'”
  • “Financial independence. Having enough that I don’t need to go into work, but still enjoying work enough that I want to spend time working. Beyond that, instilling the right lessons in my children and (future) grandchildren and leaving a legacy of community service. I want to make sure I’m not eating ALPO in my nineties. Beyond that, we’d like to travel, have fun, and give back.”
  • “Having a money goal and reaching it through saving and investing.”
  • “Having enough wealth to draw a “paycheck” from it periodically, sufficient for my spending needs, without having to stress about running out of money.”
  • “I am able to maintain my current standard of living and will be able to leave my sons a little.”
  • “Investment success looks like not losing money and hopefully coming out ahead of inflation over an extended time period.”
  • “Two words: financial freedom!”

Want to weigh in? Participate in our weekly member poll, updated every Tuesday, and see the results online at

For nearly 40 years, AAII has been providing unbiased, practical investor education to help individuals become effective managers of their own assets and achieve their financial goals. Consider a risk-free 30-day Trial AAII Membership today.


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