Average Monthly Return Calculator

Monthly Return Formula:

\[ \text{Monthly Return} = \frac{\text{End Value} - \text{Start Value}}{\text{Start Value}} \times 100\% \]

Monthly Return (%):

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1. What is Average Monthly Return?

Average Monthly Return is a financial metric that measures the percentage change in value of an investment over a one-month period. It helps investors track performance and make informed decisions about their portfolios.

2. How Does the Calculator Work?

The calculator uses the monthly return formula:

\[ \text{Monthly Return} = \frac{\text{End Value} - \text{Start Value}}{\text{Start Value}} \times 100\% \]

Where:

$ \text{End Value} $ — The value at the end of the month ($)
$ \text{Start Value} $ — The value at the beginning of the month ($)

Explanation: This formula calculates the percentage change in investment value over a monthly period, providing insight into short-term performance.

3. Importance of Monthly Return Calculation

Details: Calculating monthly returns is essential for performance tracking, portfolio rebalancing, risk assessment, and comparing investment strategies. It helps investors identify trends and make timely adjustments.

4. Using the Calculator

Tips: Enter the starting value and ending value in US dollars. Both values must be positive numbers, with the start value greater than zero for accurate calculation.

5. Frequently Asked Questions (FAQ)

Q1: What is a good monthly return?
A: A good monthly return varies by asset class and risk tolerance. Generally, consistent positive returns above inflation are considered good, but this depends on individual investment goals.

Q2: How is monthly return different from annual return?
A: Monthly return measures performance over one month, while annual return measures over one year. Monthly returns can be annualized to compare with longer-term performance metrics.

Q3: Can monthly return be negative?
A: Yes, monthly return can be negative if the end value is less than the start value, indicating a loss for that month.

Q4: Should I include dividends in the end value?
A: Yes, for accurate total return calculation, include all dividends, interest, and capital gains received during the month in the end value.

Q5: How often should I calculate monthly returns?
A: Monthly returns should be calculated at the end of each calendar month for consistent tracking and comparison across time periods.