Average Rate of Return
What is Average Rate of Return?
The average rate of return is a measure of the profitability of an investment or a portfolio of investments. It is calculated by dividing the total return on an investment by the number of years the investment was held. The total return includes any appreciation in the value of the investment, as well as any income generated from the investment, such as dividends or interest.
The average rate of return is often expressed as a percentage and is used to compare the relative performance of different investments. It is a useful measure of the long-term performance of an investment, as it takes into account both the returns earned and the length of time the investment was held.
It is important to note that the average rate of return is a historical measure and is not necessarily indicative of future performance. It is always important to carefully consider the risks and potential returns of an investment before making a decision to invest.