Everyone loves the idea of a 10% return, but most people aren’t sure where to start. Before you chase that figure, it helps to know what actually delivers it, how much risk you’re taking, and what you can do today to improve your odds.
In the UK market, a few asset classes consistently target around 10% per year. Equity index funds that track the FTSE 100 or S&P 500 often end the year close to that level, especially after a strong market cycle. Peer‑to‑peer lending platforms sometimes quote 8‑12% yields, but they come with borrower default risk. Dividend‑focused stocks can add 4‑6% in cash plus price growth that pushes total returns toward 10%.
Don’t forget property investment trusts (REITs). They collect rent, pay out dividends and can appreciate, giving many investors a double‑digit yearly return. Finally, a well‑chosen balanced portfolio of stocks, bonds, and alternative assets can smooth volatility while still aiming for the 10% target.
Step one is to decide how much volatility you can stomach. If a 20% dip would keep you up at night, you probably want a mix of stocks and low‑risk bonds, not a pure equity play. A 70/30 split (70% equities, 30% bonds) is a common starting point; it often lands in the 8‑12% range depending on market conditions.
Step two is diversification. Spread your money across different sectors – tech, healthcare, consumer goods – and across geographies. A simple UK‑focused fund may miss out on growth in the US or emerging markets that help push overall returns up.
Step three is cost control. High fund fees eat directly into that 10% goal. Look for low‑cost index funds or ETFs with expense ratios below 0.2%. Saving just 0.5% on fees can boost your net return by a full percentage point over time.
Step four is regular contributions. Adding money each month, even a small amount, smooths out market timing and compounds faster. Think of it as "buying the dip" automatically – you never have to guess when the market is low.
Finally, keep an eye on tax. A Stocks & Shares ISA lets you earn that 10% without paying capital gains tax or income tax on dividends, protecting more of your profit.
Putting these steps together gives you a realistic path to double‑digit returns without gambling. Remember, 10% is an annual average, not a guaranteed yearly hit. Some years you’ll see 15%, other years you might only get 5%. The key is staying the course and adjusting your mix when life or the market changes.
So, if you’re ready to chase 10% returns, start by picking a low‑cost, diversified equity fund, add a few bonds for balance, use an ISA to shelter the earnings, and contribute regularly. Over time, you’ll see the power of compounding work in your favor – and you’ll have a solid, understandable plan to back it up.
Chasing a 10% return through savings accounts sounds amazing, but is it actually possible? This article breaks down what's realistic, why big banks won't offer eye-popping rates, and sneaky ways to boost your savings. Get actionable tips for stretching your money further while dodging common traps and scams. By the end, you'll know exactly where to look, what to avoid, and how to make your savings work harder.
Read More >>