## Uses and Tips for the Rate of Return Calculator

The calculator uses standardized financial formulas and can be used to find the rate of return on other assets you purchased, like a home.

The Annualized Rate of Return reflected in the calculator takes the differences in the dates entered - whether days, months or years - and performs the necessary calculations to provide a comparable one-year rate of return.

It's not necessary to enter the exact date, if you're looking for general results by year. If this is your intention, simply enter non specific dates by year, like 1/1/2006.

The rate of return calculator can be used to **estimate returns** as well. Simply enter the expected selling price and current date in the appropriate fields.

Although designed for single investments, you could feasibly add a series of investments purchased and find their total rate of return. For example, if you purchased 10 coins in the same year, you could add their values together, indicate the same year of purchase and and then add up their selling or anticipated selling prices, and enter those.

## A few Rate of Return barometers for consideration:

- The average rate of return for the S&P 500 from January 1970 to December 2006, including reinvestment of dividends, was approximately 11.5% per year.
- During the same period above, the best 12-month return was 61% while the worst was -39%. Refer to Standard & Poor's for the latest information
- Most bank checking accounts typically pay as little as 1% or less.

## Useful or interesting links on Rate of Return and other rates

- Wikipedia's description of rate of return
- Another metrics, the Internal Rate of Return (IRR) and formulas from The Investment FAQ
- Rule 72 - rule of thumb that can help compute when your money will double at a given rate
- The CNNMoney.com home rate of return calculator
- Calculating total return and compound annual growth rate (CAGR)
- How do return rates affect retirement income?
- Return on Investment (ROI)