Calculate return - this is how you calculate what investing can yield.

Money is becoming worth less and less. That's why you want to put it to work. In the hope that it will become more valuable, or at least remain stable. Profit on your money is also called a positive return. But how do you achieve a return? And how do you calculate the return exactly?

In this article you will discover what return is, how to easily calculate it and what you can do to achieve a return yourself.

What is return?

Return is how much an investment yields or costs you, expressed as a percentage. Is the percentage positive? Then the proceeds are greater than the costs. In the negative? Then your investment is now worth less than your deposit.

Good to know: risk and return often go hand in hand. An investment with a high risk often has a higher potential return than an investment with a low risk.

This is how you calculate your return

To estimate whether an investment, such as buying a share, could be worthwhile, you can calculate the potential return. You often calculate returns over a specific period, such as per month or per year. To do this, you need two pieces of information:

- The (estimated) value of your investment at the beginning of the period
- The (estimated) value of your investment at the end of the period

Calculate annual return

If you want to know your annual return, you can use the following example:

At the beginning of 2022, Amy had a value of €10,000 in investments. She has studied the rates and estimates that at the end of 2022 the value of her portfolio will be €12,000. Amy estimates that her return this year will be 20%, she calculates her annual return by placing the data in the formula: ((12,000-10,000)/10,000)x 100%= 20%. ‍‍

Calculate monthly return

You now know how to calculate the annual return. But in some cases, it is valuable to calculate your monthly return. You calculate the average monthly return as follows:
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Amy expects an annual return of 20% on her investments. Amy estimates that her monthly return will be 1.53%. She calculates her monthly return by placing the data in the formula: (1+(12000 - 10000)/10000)^(1/12) - 1 = 1.53%.

Please note: there are different ways to calculate returns. We have only discussed one way in which you can do this.

3 different ways to generate returns

Achieving a return is a great goal. But doing this successfully often proves to be a challenge. To help you further, we have developed three different methods for you.

Method 1: Saving

One way to achieve a return is by saving money. You do this by putting money in your savings account and letting it yield through the savings interest that your bank gives you. Unfortunately, saving has yielded little in recent years. This is due to the low savings interest rates. That is why nowadays you should look for other ways to make your money work.

Method 2: Investing

A popular way to achieve returns is by investing your money. Investing is a form of investing where you commit money to make it more valuable. You can do this, for example, by investing in shares of companies, bonds or investment funds.

Method 3: Real estate

A stable way to achieve returns is by investing in real estate. This includes homes, commercial properties and factories. However, due to the high initial investment, this method is out of reach for most Dutch people.

Do you want your money to work for you without any worries?

Do you want to potentially earn a return, but don't have the time or inclination to learn about investing? Vive puts your money to work with a customized investment plan and executes it for you. This way you build wealth without having to do anything.

Please note! Investing involves risks.