1. What is the Estimated Return Formula?

The estimated return formula calculates the percentage gain or loss on an investment by comparing the future value to the principal value. It's a fundamental measure of investment performance.

2. How Does the Calculator Work?

The calculator uses the estimated return formula:

Where:

• \( FV \) — Future value of the investment
• \( PV \) — Principal value (initial investment)

Explanation: The formula shows what percentage your investment has grown (positive return) or declined (negative return) over time.

3. Importance of Return Calculation

Details: Calculating investment returns helps investors evaluate performance, compare different investments, and make informed decisions about portfolio allocation.

4. Using the Calculator

Tips: Enter the original investment amount as PV and the current or projected value as FV. Both values should be in dollars without commas.

5. Frequently Asked Questions (FAQ)

Q1: Does this calculator account for time period?
A: No, this calculates total return regardless of time. For annualized returns, you would need to know the holding period.

Q2: What's considered a good return?
A: This depends on the investment type, risk level, and market conditions. Historically, stock market averages 7-10% annual return.

Q3: Should I include dividends in FV?
A: Yes, for total return calculations, include all dividends reinvested and capital gains.

Q4: Can returns be negative?
A: Yes, if FV is less than PV, the return will be negative indicating a loss.

Q5: How does this differ from CAGR?
A: This shows total return, while CAGR (Compound Annual Growth Rate) shows the smoothed annualized return over multiple periods.