The main goal of our investments will always to be at a higher profitability than the best possible risk-free option of investing. As we risk with our investments and have to involve our knowledge and time it is logical that we expect a better return than we get just for giving money to a financial institution. To assess our investment we could use various benchmarks, for example:
  1. Best free of risk possibility - this is the final benchmark for any investment, we cannot go lower than that.
  2. The average return on associated index (if we invest in shares).
  3. The average return on stocks from the same market sector (for shares).
  4. Average interest on government bonds across the world (for bonds, but could also be considered as a more ambitious alternative for free of risk investment bench). For forex, we can benchmark against best interest on governmental bonds available to reflect risk.
  5. Average profit on assets with similar risk.
  6. Fund/hedge fund based on the same assets. Best fund's result for the similar assets.
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