Calculating an investment rate of return ( ROI) is an important step in helping you manage your investments. A rate of return or return on investment is the gain or loss on an investment over a specified period, expressed as a percentage increase over the initial investment cost. Gains on investments are considered to be any income received from the security plus realized capital gains. For example if you bot 10 shares of XLE at $75 per share, the initial cost is $750, and if you sold those same 10 shares at $85 per share, the rate of return is 13.3% ($85-$75/$75)on your investment. Calculating an investment ROI or rate of return is a simple and useful starting point in considering any investment. However, this simple calculation differs according to investment type or class. For example, if Ivan Boesky invested $5000 in some real estate and sold it 10 years later for $25,000. The ROI on his real estate purchase is: 400% ($25K – $5K)/ $5K. However Martha Stuart invested $5000 in a
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