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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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3answers
144 views

calculate equivalent yearly interst rate on house purchased with a mortgage

I've got 60k and I'm looking at buying a house for 145k. The bank offered me a 20 year loan of 100k at ~1.8% interest rate. After 20 years I would have repaid the bank around 16k, according to their ...
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2answers
49 views

How do I calculate annual return for each of the 5 years from monthly historical data?

How do I calculate the annual return for each of the 5 years from monthly historical data? How do I account for stock split and dividends in the year? I'm not sure if this is the way to calculate. ...
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3answers
274 views

Does investing in the S&P 500 for 3 years yield better yearly returns than investing for 15 years?

I know that my logic is missing something crucial as I always assumed that the longer you leave your money for the closer it approaches to the long term average return. I was just reading this ...
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2answers
140 views

Calculate T-Rex score step by step

I am having problem calculating T-REX Score which is given here https://larrybates.ca/t-rex-score/. I can calculate my T-REX Score by putting my data in the calculator given in that website. But I ...
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1answer
184 views

Do low cost ETFs or mutual funds really do well for an investor?

There are many ETFs, Mutual Funds and Unit Trusts in the market. Some ETFs advertise a low Expense Ratio and Total Expense Ratio. There are many examples: IVV, VOO and SPY for S&P 500 VNQ, RWR ...
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0answers
41 views

Options trade - statistically expected return calculation?

I also asked this question here, for it to get more visibility. I am calculating expected return for composite option strategies based on event probabilities provided by the broker. For example, ...
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3answers
169 views

How to annualize a loss of 100% for an investment?

Assume, I lend someone money against a certain fee or interest (charged at the day the loan gets repaid). The loan defaults and I get no fee or interest back. Hence, I have a return of -100% as all my ...
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1answer
52 views

Are divisions of returns linear?

If I have an annualized 5% return on $2,000, which is $100, can I always say that each 1% is $20? If that is the case, then this linear division of an annualized returns can be applied to more ...
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0answers
63 views

How to handle annualizing returns over short time interval leading to huge annualized return?

When calculating the annual return of an investment (as (1 + return in %)^(365/days)-1) over a very short time period - say 2 days - my annual return explodes due to the exponential term, which I ...
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3answers
171 views

Mathematical correct way to calculate the average net annual return of an split up investment?

I have an investment which creates different returns over a different period of time, i.e. I finance $1000 and get paid back $600 after 30 days (for which I earn a fee of $30), another $300 over 50 ...
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1answer
53 views

Calculating the expected return of bonds given a default rate

In The investor’s manifesto book by W. Bernstein there is an example of calculating the expected return of corporate bonds. It goes like this: Given that 10-year bonds yield an interest coupon of 7 ...
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1answer
150 views

What is “normal” return?

In the book, The Basics of Finance, it is mentioned a few times about the term "abnormal returns" from beating the market. May I know what then does a "normal return" refer to? If a company is ...
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2answers
177 views

30 yr mortg + IRA/stock market, OR 15yr mtg then 15 yrs IRA/stocks

I'm planning to refinance the mortgage given the low rates these days. Need to make a choice between a 30 yr fixed and a 15 or 20 yr fixed. Monthly household budget can accommodate any of the mortgage ...
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0answers
56 views

Calculating the Nominal Rate of Return of a dividend paying stock

How is the nominal rate of return for a dividend paying stock calculated. I understand that nominal return is calculated using the formula: (Current Market Value - Original Purchase Price) / Original ...
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1answer
89 views

How can I calculate the monthly total return for the S&P500 (SPX) stock?

I look at the monthly returns for SPX here: Morningstar January February March April May June 2019 7.87 2.97 1.79 3.93 -6.58 6.89 Now, ...
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1answer
68 views

Comparing APY to Money (or time) Weighted Return

I have a savings account with Ally and an investment account with Wealthfront. I'd like to know how the investment is doing, compared to just leaving the money in my savings account. Ally gives me an ...
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3answers
171 views

Two investments with same % returns but different dollar returns

If two investments have returns of 20% and the same amount of risk but: InvestmentA: returns $200 requires more capital InvestmentB: returns $50 requires much less capital than A Is InvestmentA the ...
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1answer
189 views

Negative rates on government bonds

Take the german 10J-Bundesanleihe for example, as far as I know the rates for it went negative recently. Is there any incentive for private investors / or institutional ones to invest now into this ...
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2answers
127 views

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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1answer
120 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
141 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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1answer
558 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
81 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
41 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
385 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
158 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
104 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
25 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
187 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
201 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
600 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 ...
1
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3answers
196 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
147 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
109 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
89 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
79 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
314 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 ...
5
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1answer
198 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 ...
2
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1answer
29 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
58 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
40 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
231 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
1k 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
84 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
117 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
186 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
2k 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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1answer
116 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 ...
5
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1answer
472 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
152 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,...