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Total Return Formula:
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Total Return is a performance measure that reflects the actual rate of return of an investment or a portfolio of investments over a given evaluation period. It includes interest, capital gains, dividends, and distributions realized over the period.
The calculator uses the Total Return formula:
Where:
Explanation: The formula calculates the percentage return on an investment by considering both capital appreciation and income from dividends.
Details: Total Return provides a comprehensive view of investment performance, accounting for all sources of return. It's essential for comparing different investments and making informed financial decisions.
Tips: Enter the beginning value, ending value, and total dividends received in dollars. All values must be positive numbers, and the beginning value must be greater than zero.
Q1: What's the difference between total return and capital gain?
A: Capital gain only considers the price appreciation, while total return includes both capital gains and income from dividends or interest.
Q2: Can total return be negative?
A: Yes, if the ending value plus dividends is less than the beginning value, the total return will be negative, indicating a loss on the investment.
Q3: How often should I calculate total return?
A: It depends on your investment strategy. Many investors calculate it annually, but you can calculate it for any period that matches your investment horizon.
Q4: Does this work for all types of investments?
A: The formula works for any investment that has a beginning value, ending value, and generates income (dividends, interest, etc.) during the period.
Q5: Should I use this for comparing different investments?
A: Yes, total return is one of the best metrics for comparing performance across different types of investments over the same time period.