Questions tagged [rate-of-return]

For questions relating to various measures of the rate of return on an investment, e.g. Internal Rate of Return, Financial Management Rate of Return, etc. Note that questions about these terms that don't apply to personal finance or actual problems you face, e.g. homework questions, are probably off-topic.

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How inflation affects returns and dividends

How inflation is linked to returns AND dividends? We know that adj returns are (1+return)/(1+inflation) -1 But how do we account for dividends? Suppose: 10% annual return 3% inflation 4% dividend ...
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115 views

How to adjust for long term inflation in an investment plan

So I have my investment Plan set in March 2019, with initial portfolio value of 250.000€, annual return 11% and long-term inflation rate at 1.5%. As you can see in column A, I have Capital BoP, ...
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4answers
135 views

What is an appropriate metric measure average annualized rate of return for an average investor?

Let us say an investor invests $X per year for N years. Let us say the final portfolio value is $Y. In this scenario, how should I measure a metric that quantifies "average annualized return"? I ...
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67 views

How to calculate quarterly returns from monthly?

The following monthly returns: 56.12% 15.00% -2.27 equal 75.46% for the quarter. What is the calculation to get 75.46%?
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1answer
78 views

Is there a type of investment that doesn't eventually cost the business money for a return?

I have been doing research on types of investing and funding for a startup, but I'm still pretty clueless, so please disregard this question if it's ridiculous. I also apologize if this is the wrong ...
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1answer
40 views

How to calculate return on capital for calendar year?

For an options portfolio, I'd like to calculate return on capital from Jan to Dec. These are monthly options that are held for a few days to months. There's a couple of problems with trying to ...
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2answers
109 views

What is the difference between Rate of return and Return on Investment

Investopedia Return on Investment (ROI) page says ROI can be used in conjunction with Rate of Return, which takes in account a project’s time frame From this I understood Return on Investment and ...
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1answer
151 views

How should I calculate how much my money is _grown_?

I invest in multiple streams - equities, mutual funds, bank deposits etc. Depending on the asset class, my rate of return is different, naturally. Some asset classes generate higher ROI (with higher ...
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2answers
63 views

Validating Annualized TWR

We have: an initial deposit of $2,500,000 Then, every year end we make a deposit of $750,000 We make this same deposit for 13 years At the end, we have a final value of $50,000,000 Our system ...
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1answer
22 views

Annualized return of bond fund

How do you calculate the say a 10-year annualized return of FTSE TMX Canada High Yield Bond Index. Please dumb it down as to the process.
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2answers
152 views

How to calculate the return from a mutual fund?

How do I calculate the return from a mutual fund invested as a monthly SIP of Rs. 5000 over a period of 3 years at a return rate of 20.4% per annum? The projected amount for the same is calculated by ...
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1answer
107 views

How is the “Hurdle Rate” of the Hedge Fund determined?

I understand that "High Water Mark" is the highest NAV value that the Hedge Fund has ever reached, and therefore, the threshold NAV value of the Hedge Fund in question needed in order for the Hedge ...
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4answers
587 views

Real Estate: Why does the maximum compound gain happen somewhere in the middle of the mortgage term?

I construct a spreadsheet to investigate when is the best time to pay off a house loan. In my model, there are two factors at work: The real estate appreciation rate, in this case I set it to 5% The ...
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3answers
111 views

What does Robinhood's account graph represent?

I'm confused at what the Y-axis of Robinhood's account graph represents. It is not labeled. It's showing $3,000 when hovering over a date well before I ever created an account on robinhood. I would ...
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1answer
113 views

Portfolio questions

I am constructing a portfolio and considering a number of different security classes: Stocks, commodities, ETFs, currencies and bonds. In order to decide which securities to include in my Portfolio ...
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2answers
104 views

How to calculate return on investment when the asset increased in value?

A house bought some years ago for 100K earns 5K each year. That's rent minus costs of ownership (maintenance, electricity, local taxes). Today that house would easily sell for 150K. The rent and ...
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1answer
51 views

Calculate ROI over multiple trades

I'm looking for a formula to calculate my over all return based on N trades and avg return per trade (R). Let's say: My average return per trade (R) is 5% and the number of trades (N) made are 100. ...
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1answer
76 views

Which investment in the world provides the highest return [closed]

There are several investment options available that include gold, real estate, T-bills, stocks, bonds etc. I have heard that the most return that you can get is stocks of small enterprises. Can anyone ...
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1answer
220 views

Intuition behind Internal Rate of Return (IRR)

What is the intuition behind Internal Rate of Return. From Wikipedia: The internal rate of return on an investment or project is the "annualized effective compounded return rate" or rate of ...
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1answer
104 views

Would high interest rates offset the issue of keeping money in a weak currency?

I am a UK resident and recently I managed to unlock an account in South Africa with FNB that my family had set up for me. The account is worth R90k (~£5k). I have no intention of moving back to South ...
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1answer
26 views

Understanding how to compare internal rate of return to fixed income investment

I know that the IRR is the interest rate that makes the net present value zero. And I understand that a higher IRR means a better investment. So if I calculate an IRR of 14% for an investment and I ...
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1answer
45 views

How are net income and yield calculated for margin trading?

You have purchased 150 shares at 10 each. You expect to sell these at 15 each. You only managed to sell 100. Out of your initial purchase price, 400$ were borrowed. Brokerage fee= 2% for the ...
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1answer
39 views

calculate performance vs. buy and hold for a period

If I know the daily performance of an investment strategy vs. buy and hold for a certain number of days, how can I get the performance over an entire period? For example: day 1) vs. Buy hold = 3% ...
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2answers
195 views

Do SPY prices include dividends?

I'd like to calculate the return of SPY over a range of time. For example: 5/1/18: 264.98 9/14/18: 290.88 264.98 - 290.88 = 25.9 25.9/264.98= 0.0977 = 9.77% Does the 9.77% return include SPY ...
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1answer
644 views

How should you calculate the average daily return on an investment based on a history of gains?

I started an Acorns account several months ago to use as a glorified savings account. I don't make contributions on purchases, but I contribute 10% of my paycheck to it every two weeks (Richest Man ...
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2answers
75 views

How to factor dividends into SPX returns?

I'd like to calculate the return of the SPX from March 1, 2018 to July 31, 2018 with dividends included. SPX pays out a 1.80% dividend: https://www.investopedia.com/ask/answers/040915/does-sp-500-...
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1answer
116 views

Rate of return on a loan

If I lend you $100 at, say, 10% annual interest for a 3 year term (36 months), your monthly instalment (usual amortization schedule) should be $3 per month for 36 months, for a total of $116, right? ...
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2answers
174 views

How do I calculate the ROI for a rental property I've owned (mortgaged) for about 15 years?

We own a two family house and both parts are being rented. We moved out years ago and now live with extended family... "temporarily." Trying to figure out the best financial route while getting into ...
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1answer
1k views

IRR Calculation with multiple investments

Most of the times, most of the searches are returning the IRR calculation just based on a single initial investment. Imagine you have a plan that asks investors to supply money not only once, and you ...
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0answers
27 views

What is the relationship between the discount rate and the rate of return on a project? [duplicate]

These terms are used quite interchangeably. For example, the expected return in the CAPM model is used to estimate cost of equity. Edit: My question is asking about the expected rate of return r is ...
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1answer
110 views

UK bond yield below inflation rate means negative ROI likely if held until maturity?

Current UK bonds have nominal interest rates well below the current inflation rate, even the long-term ones. If we assume that, on average, the inflation rate remains the same or rises, and the bonds ...
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1answer
463 views

Is this how to calculate annualized return?

For a savings account that is returning 2.0 APR, on $10,000, $200 in interest will be earned in one year. If I have a return of 9% on a stock trade with a holding period of 3 months, is the ...
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4answers
149 views

Real estate repair: Out of pocket or on credit?

You often hear the advice, that you should eliminate all debt, before starting to invest. However, in the following scenario it seems the opposite to be the right decision: In order to be rented out,...
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1answer
85 views

Why do so many tools and sites not show total returns of mutual funds?

My understanding that the total return of a fund is the NAV capital return plus the income return (dividends, etc). It seems to me that (outside of tax implications) total return is the most critical ...
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3answers
597 views

Can money work that hard for you?

Yesterday I was thinking about this: Assume you have around 600.000€, and get around 10% to 25% annual return on a fairly aggressive fund investment. Now assume that each year you take out 80.000€ ...
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1answer
52 views

Where can I find total returns for UK stocks [closed]

I understand the formula for total return, i.e. year close minus year open plus dividends all divided by year open price. But I can't seem to find the total return on Yahoo UK finance for a stock, or ...
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2answers
668 views

How to calculate return for “negative” investment

I'm tracking a few investments, with a simple formula for total (non-annualised) return, which is (current_value - money_invested) / money_invested. For one of my investments, however, I already ...
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1answer
63 views

How to calculate internal rate of return [beginner]

I am an informatics student who was given an assignment to do with finance and we're not very financially literate. We are asked to theoretically build a platform to mimic bond exchanges. As part of ...
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1answer
2k views

How do I annualize returns for less than one year? [closed]

I know that it's not good to annualize returns for less than one year but wanted to know how to annualize monthly returns from February 28, 2017 to October 31, 2017. Only the February return is not a ...
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3answers
263 views

Dalbar: How can the average investor lose money?

Dalbar publishes the Quantitative Analysis of Investor Behavior (QAIB) annually. In it, several claims are made, the most common of which is that the average investor consistently under-performs the ...
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4answers
3k views

Shouldn't a Roth IRA accumulate more than 1 cent of interest per month?

Ten months ago, I opened a Roth IRA with an initial principal of $1,000, invested in one of those "Target Date" retirement mutual funds. I also set up $100 automatic monthly contributions. The ...
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1answer
108 views

Annualized Rate of Return on Stock Purchased in Tranches

I am a retail investor investing directly in equities in the Indian stock markets. I would like to understand the correct way to compute the return on particular stocks in my portfolio, which I have ...
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1answer
77 views

What is an accounting term that factors growth as a function of time and discount rate?

Bare with me, as I don't know how to properly describe what I'm asking for. Please edit the question if it can be asked in a way that uses correct vocabulary. I might be just asking for an compound ...
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4answers
257 views

Calculating Average Rate of Return

I'm trying to figure out how to calculate the average rate of return on some investments. I'm doing this because I'm trying to assess the impact of fees. In my theoretical scenario, let's say that I ...
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6answers
3k views

How can I calculate total return of stock with partial sale?

I have searched the internet for hours and still can't find the formula to calculate the Total Return in percentage with the below scenario. Bought 310 shares at $3.15 brokerage $19.95 Sold 200 ...
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2answers
215 views

Clarify Microsoft's explanation of MIRR

I don't understand Microsoft's MIRR example. The second parameter is the finance_rate: Finance_rate Required. The interest rate you pay on the money used in the cash flows. The example then ...
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4answers
677 views

When investing, is the risk/reward tradeoff linear?

Rule 1 of investing is that the more risk you're willing to take, the higher your potential for reward. Bonds are low-risk and come with maybe 1-2% returns, stocks much higher risk and maybe 5-15% ...
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1answer
7k views

How to calculate the return over a period from daily returns?

If I have daily returns of my portfolio over a period (let's say January to December), how do I calculate the total return over the period or per month? What I did now is the following: Calculate ...
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1answer
92 views

What is the rate of return for a security when there is no risk-free rate (CAPM)?

Let say I want to invest 1000€ in cryptocurrencies in order to get 2000€ In the famous CAPM, the relationship between risk and rates of returns in a security is described as follows: For a security ...
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1answer
839 views

Annualized Return vs CAGR of Investment

I am a bit confused by the the two terms 'Annualized Return' and 'CAGR' (compounded annual growth rate). The definition for annulized return is here. The definiton for CAGR I have taken from here. My ...