What Is My Rate Of Return Calculator

Rate of Return Formula:

\[ RoR = \frac{(Ending\;value - Beginning\;value + Income)}{Beginning\;value} \times 100 \]

Rate of Return (RoR):

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1. What Is Rate Of Return?

Rate of Return (RoR) is a fundamental financial metric that measures the percentage gain or loss on an investment over a specific period. It helps investors evaluate the performance and profitability of their investments.

2. How Does The Calculator Work?

The calculator uses the Rate of Return formula:

\[ RoR = \frac{(Ending\;value - Beginning\;value + Income)}{Beginning\;value} \times 100 \]

Where:

\( Ending\;value \) — Current value of the investment
\( Beginning\;value \) — Initial investment amount
\( Income \) — Any income generated from the investment (dividends, interest, etc.)

Explanation: The formula calculates the total return as a percentage of the original investment, including both capital gains and income generated.

3. Importance Of Rate Of Return Calculation

Details: Rate of Return is crucial for investment analysis, portfolio management, and comparing different investment opportunities. It helps investors make informed decisions about where to allocate their capital.

4. Using The Calculator

Tips: Enter the beginning value (initial investment), ending value (current value), and any income generated (dividends, interest). All values must be in dollars and beginning value must be greater than zero.

5. Frequently Asked Questions (FAQ)

Q1: What is a good Rate of Return?
A: A good RoR depends on the investment type and risk level. Generally, 7-10% annually is considered good for stock investments, while lower returns are expected for safer investments like bonds.

Q2: How does RoR differ from ROI?
A: RoR typically refers to the percentage return over time, while ROI (Return on Investment) can be calculated for specific periods and may include additional factors like time value of money.

Q3: Should I include reinvested dividends?
A: Yes, reinvested dividends should be included in either the ending value or income calculation to get an accurate total return.

Q4: What time period should I use?
A: The calculator works for any time period (daily, monthly, annually). Just ensure all values correspond to the same period for accurate results.

Q5: Can RoR be negative?
A: Yes, if the investment loses value, the RoR will be negative, indicating a loss on the investment.