Return on a Lump-Sum Investment
Determines the actual annual return of a lump-sum investment from its starting and ending value.
Enter your own numbers and press "Calculate" – or load an example on the right; "Type in" replays it on the device.
Performance is not return: a high total rise sounds spectacular, yet the real annual return lies far below it because of compound interest. Always have the return named to you, not the performance.
→ Story & full explanation: Performance is not the same as return
Bond prices fluctuate with the interest-rate environment. If you sell before maturity at a risen price, the realized return can lie above the original issue yield – timing matters.
Extracting the return from the starting and ending value means taking the n-th root of the ratio: i = (FV/K₀)^(1/n) − 1. The root spreads the total gain evenly across all years – that is the true average return, not the naive total gain divided by the years.
Internal rate of a lump-sum investment, output as the effective rate.