investing / investing basics

Investment Return and Rate of Return: What’s the difference?

Every investor wants to earn money on their investments. FINRA explains:
Investment return is the money you make or lose on an investment. Ideally, your return will be positive: your initial investment or principal will remain intact, and you’ll end up with more money than you invested.”
“Total return is a measure of your profit or capital appreciation before taxes and commissions or fees.”
Rate of return = Total return ÷ Investment amount.
The other factor you have to take into account in evaluating your return is the number of years you own the investment. There’s a big difference in realizing a return of 16.67 percent on an investment you own for just one year, or what’s called an annual return, and realizing the same return on an investment you own for five years. Your annualized return over a five-year period is only 3.13 percent.” For more info:
Source: Financial Planning for Women