Calculator Rate Of Return

Rate of Return Formula:

\[ RoR = \frac{End - Start}{Start} \times 100\% \]

Rate of Return (RoR):

Unit Converter ▲

Unit Converter ▼

From:	To:

1. What is Rate of Return?

Rate of Return (RoR) is a fundamental investment performance metric that measures the percentage change in value of an investment over a specific period. It helps investors evaluate the profitability and efficiency of their investments.

2. How Does the Calculator Work?

The calculator uses the Rate of Return formula:

\[ RoR = \frac{End - Start}{Start} \times 100\% \]

Where:

\( End \) — Ending value of investment (currency)
\( Start \) — Starting value of investment (currency)

Explanation: The formula calculates the percentage gain or loss by comparing the ending value to the starting value, providing a standardized measure of investment performance.

3. Importance of RoR Calculation

Details: Rate of Return is crucial for comparing different investment opportunities, assessing portfolio performance, making informed investment decisions, and measuring financial growth over time.

4. Using the Calculator

Tips: Enter the starting investment value and ending investment value in any currency. Both values must be positive numbers, with the start value greater than zero.

5. Frequently Asked Questions (FAQ)

Q1: What does a negative RoR indicate?
A: A negative RoR indicates a loss on the investment, meaning the ending value is less than the starting value.

Q2: How does RoR differ from absolute return?
A: RoR is expressed as a percentage, making it easier to compare investments of different sizes, while absolute return shows the actual monetary gain or loss.

Q3: What is a good Rate of Return?
A: A "good" RoR depends on the investment type, risk level, and market conditions. Generally, returns that exceed inflation and relevant benchmarks are considered good.

Q4: Does RoR account for time period?
A: The basic RoR calculation doesn't account for the time period. For annualized returns, additional calculations are needed to normalize returns over different time frames.

Q5: Can RoR be used for all types of investments?
A: Yes, RoR can be calculated for stocks, bonds, real estate, mutual funds, and any other investment where you have a clear starting and ending value.