Personal Rate Of Return Calculator Formula

Personal Rate Of Return Formula:

\[ RoR = \frac{(CV - IV)}{IV} \times 100\% \]

Personal Rate Of Return (RoR):

Unit Converter ▲

Unit Converter ▼

From:	To:

1. What is the Personal Rate Of Return Formula?

The Personal Rate of Return (RoR) formula calculates the percentage return on an investment by comparing the current value to the initial investment. It provides a simple way to measure investment performance over a specific period.

2. How Does the Calculator Work?

The calculator uses the Personal Rate of Return formula:

\[ RoR = \frac{(CV - IV)}{IV} \times 100\% \]

Where:

$ CV $ — Current value of investment ($)
$ IV $ — Initial value of investment ($)

Explanation: The formula calculates the percentage gain or loss on an investment by comparing the current value to the original investment amount.

3. Importance of Personal Rate Of Return Calculation

Details: Calculating personal rate of return is essential for evaluating investment performance, comparing different investment options, and making informed financial decisions about portfolio management.

4. Using the Calculator

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

5. Frequently Asked Questions (FAQ)

Q1: What is a good personal rate of return?
A: A good rate of return depends on the investment type, risk level, and market conditions. Generally, returns that exceed inflation and benchmark indices are considered good.

Q2: How does this differ from annualized return?
A: Personal rate of return shows total return over the entire period, while annualized return shows the average yearly return, accounting for compounding.

Q3: Can this formula show negative returns?
A: Yes, if the current value is less than the initial value, the formula will calculate a negative percentage, indicating a loss on the investment.

Q4: Does this formula account for additional contributions?
A: No, this simple formula only works for single investments without additional contributions or withdrawals. For complex scenarios, use time-weighted or money-weighted return calculations.

Q5: How often should I calculate my personal rate of return?
A: It depends on your investment strategy. Long-term investors might calculate quarterly or annually, while active traders might calculate more frequently.