Investment returns refer to the gains or losses generated from an investment over a specific period of time. This metric is typically expressed as a percentage of the initial investment and can include various forms of earnings such as interest, dividends, and capital gains. Investment returns can be realized (when assets are sold for a profit) or unrealized (when the asset’s value increases but is not sold).
There are several ways to calculate investment returns, including simple return, which is the change in value of the investment divided by the initial amount invested, and annualized return, which represents the average yearly return over a given period. Returns can be positive (indicating profit) or negative (indicating loss), and they are a crucial measure for evaluating the performance of different investment options. Understanding investment returns helps investors make informed decisions about where to allocate their resources in order to achieve desired financial goals.
In the world of investing, index funds usually provide a reliable reflection of market performance. However, there’s a thrilling alternative—selecting individual stocks can lead to substantial profits. A prime example…