1. What is Monthly Return?

The monthly return measures the average percentage gain or loss per month on an investment, accounting for both the initial investment and any additional contributions made over time.

2. How Does the Calculator Work?

The calculator uses the monthly return formula:

Where:

• \( FV \) — Future value of the investment
• \( PV \) — Initial investment (present value)
• \( \text{Contributions} \) — Total additional investments made
• \( \text{Months} \) — Investment period in months

Explanation: The formula calculates the net gain relative to the total invested amount, then annualizes it by dividing by the number of months.

3. Importance of Monthly Return Calculation

Details: Calculating monthly returns helps investors compare performance across different time periods and investment vehicles, and assess whether an investment is meeting expectations.

4. Using the Calculator

Tips: Enter all values in dollars (except months). Ensure future value is greater than or equal to initial investment plus contributions for positive returns.

5. Frequently Asked Questions (FAQ)

Q1: What's a good monthly return for mutual funds?
A: Typically 0.5%-1% monthly (6%-12% annualized) is considered good for diversified mutual funds, but this varies by market conditions.

Q2: How does this differ from annualized return?
A: This shows the average monthly return which can be multiplied by 12 for a rough annual equivalent, though compounding makes precise annualization more complex.

Q3: Should I include dividend reinvestments?
A: Yes, future value should include all reinvested dividends and capital gains for accurate return calculation.

Q4: What if I made irregular contributions?
A: This calculator assumes total contributions. For irregular patterns, use dollar-weighted return (IRR) calculation instead.

Q5: Can this be used for other investments?
A: Yes, it works for any investment where you know the initial value, final value, contributions, and time period.