1. What is Actual Return?

Actual Return measures the percentage gain or loss on an investment over a specific period. It provides a standardized way to compare investment performance regardless of the initial investment amount.

2. How Does the Calculator Work?

The calculator uses the actual return formula:

Where:

• \( \text{Final} \) — Final value of investment ($)
• \( \text{Initial} \) — Initial investment amount ($)

Explanation: The formula calculates the percentage change from the initial investment to the final value, showing the investment's performance.

3. Importance of Return Calculation

Details: Calculating actual return is essential for investment analysis, portfolio management, and comparing different investment opportunities. It helps investors make informed decisions about their financial strategies.

4. Using the Calculator

Tips: Enter the initial investment amount and final value in dollars. Both values must be positive numbers (initial > 0).

5. Frequently Asked Questions (FAQ)

Q1: What does a negative return indicate?
A: A negative return indicates a loss on the investment, where the final value is less than the initial investment amount.

Q2: How is this different from annualized return?
A: Actual return shows the total return over the entire period, while annualized return converts this to an equivalent yearly rate for comparison across different time periods.

Q3: Should I include dividends and interest?
A: Yes, the final value should include all returns from the investment, including capital gains, dividends, interest, and any other distributions.

Q4: What's considered a good return?
A: This depends on the investment type, risk level, and market conditions. Generally, returns should be compared to relevant benchmarks and inflation rates.

Q5: Can this calculator handle multiple investments?
A: This calculator calculates return for a single investment. For multiple investments, you would need to calculate the weighted average return of the portfolio.