Actual Rate Of Return Calculator

Actual Rate of Return Formula:

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

Actual Rate of Return (RoR):

Unit Converter ▲

Unit Converter ▼

From:	To:

1. What is Actual Rate of Return?

The Actual Rate of Return (RoR) measures the percentage gain or loss on an investment over a specific period, including both capital appreciation and any income generated. It provides a comprehensive view of investment performance.

2. How Does the Calculator Work?

The calculator uses the Actual 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 during the period (dividends, interest, etc.)

Explanation: The formula calculates the total return as a percentage of the original investment, accounting for both price changes and income received.

3. Importance of Actual Rate of Return

Details: Actual Rate of Return is crucial for evaluating investment performance, comparing different investment options, and making informed financial decisions. It provides a realistic measure of how an investment has actually performed.

4. Using the Calculator

Tips: Enter the beginning value (initial investment), ending value (current worth), and any income received during the period. All values should be in dollars. Beginning value must be greater than zero.

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between RoR and annualized return?
A: RoR shows total return over the entire period, while annualized return converts this to an equivalent yearly rate for comparison across different timeframes.

Q2: Should I include reinvested dividends in income?
A: Yes, include all income received, whether taken as cash or reinvested, to get an accurate picture of total return.

Q3: What if my RoR is negative?
A: A negative RoR indicates a loss on your investment. This could be due to market declines or other factors affecting the investment's value.

Q4: How does this differ from simple return calculations?
A: This calculation includes income, making it more comprehensive than simple price appreciation calculations that only consider beginning and ending values.

Q5: Can I use this for any investment type?
A: Yes, this formula works for stocks, bonds, mutual funds, real estate, and any other investment where you can measure beginning value, ending value, and income received.