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<h1>💡 <strong>What is a Rate of Return (RoR)?&nbsp;</strong></h1><p>A rate of return (RoR) is the net gain or loss of an investment over a specified time period, expressed as a percentage of the investment’s initial cost</p><p><strong>in other words, it represents the percentage change from the beginning of the period until the end.</strong></p><p><br></p><h1>💡What is a <u>Annualized</u> RoR ?&nbsp;</h1><p>As investments come in all shapes and sizes, an annualized rate of return calculates the rate of return on investments by averaging returns on an annual basis. It makes it <strong>easier to compare the performance of different investments</strong>.</p><p>The annualized rate of return differs from the annual return because it also accounts for the <u>compounding of investment</u> earnings over time.</p><p><br></p><h1>⚙ <strong>Formulas</strong></h1><h2>input</h2><ul><li><strong>Amount Invested </strong>–&nbsp;The amount initially invested</li><li><strong>Amount Returned </strong>– The total amount you received at the end of your investment.</li><li><strong>Years</strong>&nbsp;– The length of your investment in years (quarters are excepted and will be expressed in decimals. Example 5,5 for 5 years &amp; 6 months)</li></ul><p><br></p><h2>output</h2><ul><li><strong>Gain</strong> = Amount Returned - Amount Invested</li><li><strong>RoR</strong> = Gain / Amount Invested</li><li><strong>Annualized RoR</strong> = (Amount Returned / Amount Invested) ^(1/years) -1</li></ul>

Annualized Rate of Return