As an Investor, Do You Know Your Cost of Capital?
When retail investors jump into the stock market, they may not know exactly what to expect, especially when it comes to investment returns. Some may be happy just to eke out a small gain, while others may be frustrated that their get-rich-quick scheme didn't quite pan out as planned.
That's OK because all of these things teach you how to invest and help you develop your own personal style. But in the early stages of investing, it's helpful for retail investors to try to understand their own personal cost of capital. Let me explain.
Cost of capital can have a few different meanings in the finance world, but here, the cost of capital refers to the return that publicly traded companies need to generate in order to attract investors to their stock.
Source Fool.com
