Annual Return

What is Annual Return?

An Annual Return measures the percentage gain or loss that an investment generates over one year. For investors in the stock market, cryptocurrencies, or any all-in-one trading platforms, understanding the annual return helps assess the performance of their investments.

Calculating Annual Return in Crypto and Exchange Platforms

To calculate the Annual Return, you need the initial value and the ending value of the investment over a year. Subtract the beginning value from the ending value, then divide the result by the beginning value. Finally, multiply by 100 to get a percentage.

Importance of Annual Return in Investments

The Annual Return serves as a critical metric for investors to compare the efficiency of various investments over the same period. It allows for a straightforward comparison between diverse asset classes such as stocks, bonds, and cryptocurrencies on exchange platforms.

Annual Return vs. Other Performance Metrics

While the Annual Return offers a snapshot of investment performance over one year, it's also essential to consider other metrics like volatility and risk. These factors give a more comprehensive view of the investment's health and potential.

Real-World Example of Annual Return

Let’s say you invested $1,000 in a cryptocurrency on an all-in-one platform at the start of the year and it was worth $1,200 at the year's end. Your annual return is (($1200 - $1000) / $1000) * 100 = 20%. This indicates a 20% increase in your investment over the year.