OT: Rate of Return Calculations, Big brain Fart |
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OT: Rate of Return Calculations, Big brain Fart |
Qarl |
May 12 2005, 06:52 PM
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#1
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Shriveled member Group: Benefactors Posts: 5,233 Joined: 8-February 03 From: Florida Member No.: 271 Region Association: None |
Let's say I invested $1000 in a mutual fund on November 1, 2002
At the end of April of 2005, it is worth $1450. My gain is $450 or 45% since I purchased it. But how do I calculate how much average annual return it has been for the 30 month period. Or in other words, it's equivalent to an investment making X% a year? What's the formula? Thanks.... |
michel richard |
May 12 2005, 07:56 PM
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#2
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Senior Member Group: Members Posts: 1,291 Joined: 22-July 03 From: Longueuil, Québec Member No.: 936 |
Hang on, the calculation I made assumes there was no cashflow over the period i.e. you did not earn dividends or interest payments each month.
If that is true, and you want the result on a yearly compounding basis, the formula is: ((1,450 / 1,000) ^ (1/2.5) - 1 because 30 months is 2.5 years. The answer then is 16.02 % |
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