What is: Yearly Return

What is: Yearly Return

Yearly return, also known as annual return, is a measure of the investment performance over a one-year period. It is calculated by dividing the ending value of the investment by the initial investment amount, subtracting one, and then multiplying by 100 to get a percentage.

How is Yearly Return Calculated?

To calculate the yearly return of an investment, you need to know the initial investment amount, the ending value of the investment, and the time period over which the return is being calculated. The formula for calculating yearly return is (Ending Value – Initial Investment) / Initial Investment * 100.

Importance of Yearly Return

Yearly return is an important metric for investors as it helps them evaluate the performance of their investments over a specific period. It allows investors to compare the returns of different investments and make informed decisions about where to allocate their funds.

Factors Affecting Yearly Return

Several factors can affect the yearly return of an investment, including market conditions, economic factors, interest rates, and company performance. It is important for investors to consider these factors when evaluating the potential return of an investment.

How to Improve Yearly Return

Investors can improve their yearly return by diversifying their investment portfolio, conducting thorough research before making investment decisions, and staying informed about market trends. By taking a proactive approach to investing, investors can increase their chances of achieving higher returns.

Yearly Return vs. Cumulative Return

While yearly return measures the performance of an investment over a one-year period, cumulative return measures the total return of an investment over multiple years. Both metrics are important for evaluating the overall performance of an investment portfolio.

Conclusion

In conclusion, yearly return is a key metric for investors to assess the performance of their investments over a specific period. By understanding how yearly return is calculated and the factors that can affect it, investors can make more informed decisions about their investment strategies.