Showing posts with the label investment returns

Adjusted Returns on Investment

Adjusted Returns on Investment   If someone asking you,  What is your monthly pay check or Salary ? Then, we are hesitated to tell or show the exact numbers on salary, even after our deduction from salary :) . We are thinking about that we are protecting our income numbers ! That's not a matter, either showing the pay slip or not. But, on our Investment info, we have to be careful about the returns on numbers we earned it. We just enjoying to show this much returns i had on my investments or I had a profit of XXXXX from my investments. But, do you know what is your real returns received on your hand ? Returns on Investment can by type of: Inflation Adjusted Tax Adjusted Risk Adjusted From the previous article, we have seen that about the difference between Real Rate and Nominal Rate of Return. It clearly indicates that we must aware about the Inflation, it hurts our retirement planning and Goal based investments. For Example,  If our Return is 10 % from the investment amo

Investment Returns - Real Rate vs Nominate Rate ?

Investment Returns - Real Rate vs Nominate Rate ? Which one is better for my investment, Real Rate or Nominate Rate ? Basically, the return on an investment defined on a Nominal Rate . So, we have to know, what is a Nominal Rate of Return : A Bank Fixed deposit gives you a 10 % interest (per annum) for your investment. Then, the nominal rate is also 10 % as it reflects the same. So, there is no need for any deduction from the interest bank pays you. When the Nominal rate is adjusted with the inflation rate is known as, " Real Rate of Return ". The Real Rate of return helps the investor(s) to adjust with the inflation and getting to know the exact returns on your hand. Let us see the example, A Bank FD gives you a 10 % interest (p.a) and the inflation rate is at 4 %, then the approximate real rate is: Nominal rate of return (or) Interest Rate - Inflation Rate 10 % - 4 % = 6 %  (An approximate real rate on easy calculation) Effects of Real Rate of  Return: Usually, the Nomi

How to Calculate Annualized Return on Investments

How to Calculate Annualized Return on Investments ? Previously, we had discussed about the Absolute Return on Investment , to calculate how our Invested money performing and seen how it differ from in terms of rupees as Absolute. Here, we can see to calculate the Annualized Returns on our Investments. Annualized Return can be computed as Percent (% p.a) per Annum. We can measure the returns by these method, is the better and accepted way to measuring the Investment Return. The basic purpose of Annualized Return is to standardize the investment period as though each investment was made only for One year. It helps to ease comparison of investments across Time periods. Annualized Returns can be denoted as [ % p.a ], otherwise, it is usually an Absolute Non-annualized return.  Annualized Return on Investment: (Return on Investment / Original Investment) X 100 X (1 / Holding period of investment in years) Or in simple terms,  ((End value - Beginning value) / Beginning value)  X 100 X (1 / H

How to Calculate Absolute Return on Investment

How to Calculate Absolute Return on Investment ? Return on an Investment is a calculation to assess how the investment is performing. As every investment have a group of Inflows and Outflows. The Comparison of the inflows and outflows is the Return for the investor from making the investment. Returns may be Positive (+) or Negative (-) . A Positive denotes the profit on an investment and Negative gives the loss. For eg:   Akhil bought a Real estate property for Rs. 30 lakhs and sold it to Rs. 40 lakhs Suresh bought a 100 shares of XYZ Company with the amount of Rs. 20,000/- and sold all the stocks for Rs. 15,000/- The above example tells that Akhil had a profit of Rs. 10 lakhs i.e the return on investment is Rs. 10 lakhs. Suresh had a loss of Rs. 5,000/- from his stocks. So, it denotes the Negative Return on his investment. Measuring Investment Returns: Returns can be measured by comparing the amount of Inflows and Outflows for the investment made in Absolute Rupee Terms. R