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.

Filter by
Sorted by
Tagged with
7
votes
3answers
2k views

What is the “rule of 70” or “rule of 72” with regards to investment, and how do I apply it?

What is the "rule of 72" (sometimes called the "rule of 70") with regards to investment, and how do I apply it?
2
votes
4answers
355 views

Why should I worry about the variance of the return?

I have this doubt (I hope that this is not a completely silly question). If my growth rate depends on the long period average return, why should I worry about the variance of the return? i.e. over the ...
4
votes
3answers
657 views

If a mutual fund did really well last year, then statistically speaking, is it likely going to do bad this year?

I am a looking at a specific fund that made a killing last year. I know that this is a speculative question, but I am interested whether what I am saying held true over the years. Does a mutual fund ...
3
votes
3answers
199 views

Given a certain yearly savings, how much can I spend on a capital improvement? NPV of future cash flow

I'm seeking a simple online calculator, or explicit instructions for a spreadsheet, for answering simple real-world scenarios like this: Our insurance company is offering a 30% discount on an $8200/...
2
votes
1answer
3k views

Calculating Daily Returns for Futures Contract

I am calculating daily returns for a position in a futures contract. I am a little stuck with margin and how to account for it. I specifically dont understand how return is calculated after Margin ...
2
votes
0answers
122 views

Investing in DHA property in Queensland

I was interested in investing in DHA (Defence Housing Australia) properties in Queensland. Does anyone who may have any DHA investment properties within Queensland know how these properties have ...
2
votes
2answers
76 views

Is there any calculator where you can put a set amount of money in and track the actual returns of the S&P 500 between any dates provided?

I want to find a calculator where between any two dates provided, the return on a given amount of money is calculated for the actual returns of the S&P 500 between those dates.
5
votes
4answers
35k views

Typical return for an IRA? How can I assess if my returns were decent?

The year to date return on my IRA is currently 5.3%, the DJIA is 9.5%, and the NASDAQ is at 7.7%. Is this normal or should I be disappointed? I'm just starting to pay attention to this kind of thing,...
3
votes
3answers
438 views

I'm a programmer and need a formula for calculating overal ROI [duplicate]

I'm programming a web app to track my hedge fund performance. I'd like to find my overall ROI for all time. If I had a beginning balance and my current balance then finding the ROI is easy. For ...
4
votes
1answer
136 views

How do I maximise my returns when using margin in my brokerage account?

Suppose I have an investment account with $10,000 in it. I have a margin rate of 10% per year. For a total of $2.7 interest per day, or $1,000 per year. I can invest in a high risk ETF with returns ...
2
votes
3answers
3k views

Computing portfolio return with net inflow/outflow

in his book "The four pillars of investing", the author describes this simple method to compute the rate of return for a portfolio that has a net inflow of cash: Without in- or outflow, the rate of ...
2
votes
1answer
176 views

Is the very long-term growth of the stock market bound by aggregate net income? [closed]

When talking about residential property, people sometimes throw around the idea that over the very long-term aggregate home prices can't rise faster than aggregate income. i.e. even if for a while ...
1
vote
1answer
277 views

Calculating required rate of return for an income-generating savings account

Say someone has £1m. They want it to generate an increasing level of income, starting from £25k in year 1, and increasing at a rate 7% + inflation pa, such that the end value of the savings after 20 ...
7
votes
1answer
164 views

Is there a simple term to describe the non commutative property of decreasing and increasing a value by some X percentage?

I.e., $100 decreased by 20% requires an increase of (1/(1-0.2))-1) to return to $100. Is there a simple name that refers to this?
3
votes
3answers
506 views

What is the theory behind Rick Van Ness's risk calculation in the video about diversification?

In the video, Rick Van Ness states the following scenario: Stock A has a 7% return with +/- 1% risk Stock B has a 3.5% return with +/- 0.5% risk Stock A and B are perfectly negatively correlated. A ...
8
votes
1answer
2k views

Yield of a municipal bond with a sinking fund?

How do I calculate my expected return if I buy a municipal bond at a premium with a sinking fund feature? For example, I'm looking at a bond with a coupon of 5.5%, maturing July 2015, with the ...
-1
votes
1answer
8k views

Discount Rate vs. IRR

The more I learn about the discount rate and IRR the more confused I get.... This is related to real estate. My confusion is that I've read that you should use your desired rate of return for the ...
5
votes
2answers
2k views

Discussing real estate appreciation: Compound vs. simple interest?

When people say real estate has appreciated 8 % over the past 5 years, do they mean 8 % compounded annually? or simple interest annually?
-2
votes
2answers
968 views

What is the compound annual growth rate of the major markets?

What historical compound annual growth rates (CAGRs) have the major markets provided? Data as far back as has been recorded is preferable. Specifically I'm looking for returns of: Short-term, ...
7
votes
2answers
26k views

What does Personal/Internal Rate of Return mean for a 401k?

My 401k statements show a "Personal Rate of Return" (also called Internal Rate of Return), and I am curious what this actually means. Does this indicate how my funds are performing in the market? Or ...
6
votes
3answers
9k views

How do you calculate the rate of return (ROR) when buying and selling put options?

How do you calculate the rate of return (ROR) when buying and selling put options?
4
votes
1answer
250 views

Use my savings to pay out my mortgage on my rental apartment?

My rental apartment at this point is making me a 5% ROI per year. My bank is currently charging me a 5.87% Interest rate on the mortgage, which means I am putting from my pocket to keep this apartment ...
1
vote
2answers
586 views

Are the guaranteed returns of regulated utilities really what they sound like?

In the last few days I've stumbled upon two-year-old editorials like this one and this one stating "as a regulated utility, publicly traded [PG&E] shareholders benefit from a guaranteed 11.35 ...
3
votes
3answers
282 views

Table of how many years it takes to make a specified return on the stock market?

Suppose I want to know "if I want to make a 30% return on the stock market, how many years should I expect to wait?" I know the real answer is "it depends - if the market does horrible it could ...
11
votes
2answers
436 views

How do I account for newly added money when computing my rate of return?

I have a simple spreadsheet where I track the balance in my investment account. What should I do to handle new deposits in the account? For example: End of Day 1: balance = $100 End of Day 2: $...
0
votes
2answers
522 views

Diversified portfolio return calculation & comparison to return from real estate only?

Here's a sample portfolio. If we assume that he invested $100K in the beginning (2005), is it correct that if he sold his entire portfolio and the end of 2009, he would have received $121,394? ...
5
votes
3answers
11k views

How to calculate the rate of return on selling a stock?

How to calculate the rate of return on selling a stock?
2
votes
2answers
154 views

Is it possible to estimate individual rate of inflation for a person as against the avg inflation rate for that country?

Even though normally we all use a specified inflation rate per country for financial calculations (i.e real returns, salary increases, etc..) isn't it possible for the inflation rate to have different ...
6
votes
1answer
3k views

Do net returns on mutual funds include expense ratio?

I'm considering an actively managed bond fund (DODIX) versus an similar index fund (VBMFX). Both are high quality intermediate funds. The 10-year return of DODIX (exp ratio 0.43%) is 0.86% higher than ...
4
votes
1answer
1k views

How to quantify differences in return with low expense ratio vs high expense ratio mutual funds?

One often repeated piece of financial advice is to work to minimize your expense ratios in your mutual funds in order to maximize your returns. While it is often straightforward to determine the ...
5
votes
1answer
436 views

How to determine desired/required value with “value averaging”?

As opposed to dollar cost averaging (DCA), value averaging (as described in this eHow article) is a technique where the investor determines the value the investment should have after a given time ...
9
votes
3answers
14k views

Calculate annualized return on stock with multiple transactions

I understand how to calculate the Annualized return on a stock when I have single purchase ie (principal + gain/principal) ^ (365/days) - 1 but how is it calculated when I have multiple buys and ...