Return [Meaning] - MasterTerms.com

Return

Return refers to the gain or loss made on an investment over a specific period, expressed as a percentage of the initial investment.

Return measures the profitability of an investment, taking into account both income generated (like dividends or interest) and any capital gains or losses (the change in the asset’s value). It can be calculated in various ways, such as simple return, which is the difference between the final and initial values divided by the initial value, or compound return, which considers the effects of reinvesting earnings over time. Returns can be positive or negative, depending on the performance of the investment, and they are crucial for investors when assessing the effectiveness of their investment strategies.

Return Example

For example, if you invest $1,000 in a stock and sell it later for $1,200, your return would be calculated as ($1,200 – $1,000) / $1,000 = 0.20 or 20%.