Annual return is simply what you get back from your investment each year. It's the whole enchilada of what your investment makes you (or costs you), including capital gains or losses and interest or dividends.
You owned Smooshem Ketchup Company last year on January 1. The stock traded at $50 a share. By the next New Year's Eve, the stock was trading for $55. But it also paid $2 in dividends through the year. Its annual return, in simple terms (i.e., not worrying about the time value of dividends paid at different times of the year) was $7 total from a base of $50 or 7 / 50 = 14%.
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Finance: What Is a Real Return?67 Views
finance- a la shmoop. what is a real return? like is there a fake return? you
know like the news? well kinda .real return refers to an [man frowns talking to camera]
investment return mapped against inflation. so let's say you invest in a
bond that pays five percent a year for ten years and then pays you back your
principal .boring but nice- you know like a good doctor visit. your nominal return
over that period was 5% but since inflation was 3% a year during that
period on average your real return was only 2% a year- meaning that the
performance of your investment only eked out a 2% net gain against the price of [equation]
milk gas and you know knocked off iPhones. so don't be a chump who thinks
that they're making more money than they really are, and you know keep on keeping
it real. [man sitting in chair, talks to camera]
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