The rate of return is the financial gain or loss on the value of that investment over a period of time. Usually expressed as a percentage, the rate of return can be applied to any financial instrument from real estate to shares and bonds. To calculate it, you subtract the original value from the current value and divide it by the original value, then multiply by a hundred.
For example…
Investment in real estate can provide huge rates of return, in either direction. Say you bought a property back in the year 2000 for five hundred thousand dollars, in places like Sydney or Melbourne in Australia, that property would have almost doubled in price by the year 2008, at say eight hundred thousand. This provides you with a rate of return of sixty percent. In places like several cities in the United States, it might have fallen in value, due to the global financial crisis and cost around three hundred thousand dollars, meaning your rate of return is negative forty percent.
