![]() ![]() Income is the primary driver for bonds (interest paid) and commercial real estate (rent). and Amazon Inc., which compete with Netflix in film and entertainment production and distribution.īesides changes in market price, rates of return are influenced by income received. Rates of return can be used to compare different types of investments, like stocks and real estate in the above example, or similar investments, such as shares of Walt Disney Co. Using rate of return to compare investments Side note: Try Titan’s free Investment Calculator to project your potential investment returns over a period of time. (Current value – Original value)/original value ![]() In a row above these two, enter the formula for rate of return:.Enter original value (cost) of investment in row below current value.Enter current value of the investment in one row. ![]() To calculate rate of return in an Excel spreadsheet, you can easily enter a formula: Your gain is $100,000 and your rate of return is:ĭespite the huge difference in size, the Netflix investment gave you more bang for the invested buck. Now suppose you sold your house for $500,000 a year after buying it for $400,000. Your gain is $500 – $350 = $150, and your rate of return is: A year later you sell the share for $500. How to calculate rate of returnįor example, let’s say you bought a share of Netflix in March 2020 for $350 a share. Because rate of return is expressed as a percentage, it makes it possible to compare returns on different assets, no matter how many dollars are at stake. Rate of return can be used for any investment, including stocks, bonds, real estate, art and antiques-and now, even cryptocurrencies. (Price received at end of investment – Price paid at beginning of investment) / Price paid at the beginning The period can vary-a month, a year, a quarter-but the standard for comparing returns is a one-year time frame. Simply put, the Rate of Return (often abbreviated as ROR) is the gain or loss for any investment, in percentage terms, for a given period of time. ![]()
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