1. What is Personal Rate of Return?

The Personal Rate of Return (RoR) measures the percentage gain or loss on an investment relative to the initial amount invested. It provides a clear picture of investment performance over a specific period.

2. How Does the Calculator Work?

The calculator uses the RoR formula:

Where:

• \( CV \) — Current Value of investment ($)
• \( IV \) — Initial Value of investment ($)

Explanation: The formula calculates the percentage change in value from the initial investment to the current value, providing the rate of return.

3. Importance of RoR Calculation

Details: Calculating RoR helps investors evaluate investment performance, compare different investment options, and make informed decisions about portfolio management and future investments.

4. Using the Calculator

Tips: Enter the initial investment value and current investment value in dollars. Both values must be positive numbers, with the initial value greater than zero.

5. Frequently Asked Questions (FAQ)

Q1: What does a negative RoR indicate?
A: A negative RoR indicates a loss on the investment, meaning the current value is less than the initial investment amount.

Q2: How is RoR different from annualized return?
A: RoR shows total return over the entire period, while annualized return calculates the average yearly return, accounting for compounding.

Q3: Should I include dividends in the current value?
A: Yes, for accurate RoR calculation, include all dividends, interest, and capital gains in the current value to reflect total return.

Q4: What time period does RoR cover?
A: RoR covers the entire period from initial investment to current date. For specific time comparisons, use the same calculation with values from those periods.

Q5: Can RoR be used for comparing different investments?
A: Yes, RoR allows comparison of different investments, but ensure the time periods are comparable for accurate assessment.