How To Calculate Rate Of Return (ROR)
Knowing how well your investment performs is crucial in understanding if you’ve made a good purchase. One of the most common ways to evaluate investments is by finding out its rate of return . This is the net gain or net loss of an investment during a period of time. A rate of return is a percentage, positive or negative, of the initial cost of the investment. This percentile change is what is referred to as the rate of return (RoR). As an investor, it is important to understand what RoR is and how to assess it. Any of your investments can be assessed this way, including stocks, bonds, or real estate. When thinking about an investment and assessing its RoR, investors look at rates of return from a past point in time and compare them to current similar assets to help evaluate the best performing investment. As you study and understand your investments more fully, you will begin to set requirements on the rate of return for your holdings. There are several different f...