What is a 'Return'
A return is the gain or loss of a security in a particular period. The return consists of the income and the capital gains relative on an investment, and it is usually quoted as a percentage. The general rule is that the more risk you take, the greater the potential for higher returns and losses.
Return is also used as an abbreviation for income tax return â€” see 1040 Form.
BREAKING DOWN 'Return'
While some investors will settle for principal protection, most investors are in search of return, specifically alpha returns. Alpha returns are generated when an investment generates more money than it costs. In general, there are three different types of return measures: return on investment, return on equity and return on assets. Each one is essentially calculated the same way, but the inputs have different labels.
Return on Investment
The most common return measure, also referred to as the return on investment, or ROI, is calculated by dividing the cost of the investment by the difference between the cost of the investment and the gain on the investment. It is the most generic way to calculate return and is the basic formula used to calculate other return measures. For example, if an investor pays $100,000 for real estate and then sells it for $110,000, the return is calculated by taking the difference between $100,000 and $110,000, and then dividing that number by the cost of the investment, or $100,000. The calculation is $10,000 divided by $100,000, or 10%.
Return on Equity
Return on equity, or ROE, is another commonly used measure of return used by those analyzing business performance. In this case, a companyâ€™s net income is the gain or loss, and the cost is the average of the companyâ€™s equity. ROE is used by investors looking for a return on the company's equity capital. If a company makes $10,000 in net income for the year, and the average equity capital of the company over the same time period is $100,000, the return on equity is 10%.
Return on Assets
Yet another commonly used measure of return is the return on assets, or ROA. It is commonly used as a measure of return by those analyzing financial stocks. In this case, net income is also the gain, but the investment is the assets of the company. Net income divided by average total assets equals ROA. For example, if net income for the year is $10,000, and total average assets for the company over the same time period is equal to $100,000, the return on assets is $10,000 divided by $100,000, or 10%.

Return On Capital Gains
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Total Return
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Target Return
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Average Return
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Negative Return
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Mean Return
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Investing
Explaining Expected Return
The expected return is a tool used to determine whether or not an investment has a positive or negative average net outcome. 
Investing
What Are The Main Differences Between Return On Equity (ROE) and Return On Assets?
Return on equity and return on assets are important measures for evaluating how well a company manages the capital its shareholders entrust to it. 
Markets
What's a Return of Capital?
A return of capital is an investment return that is not considered income. 
Investing
Calculating Annualized Total Return
The annualized total return is the average return of an investment each year over a given time period. 
ETFs & Mutual Funds
What are Excess Returns?
Excess returns are investment returns that exceed a benchmark or index with similar risk. 
Investing
What is a Return?
A return is the gain or loss a security generates over a period of time. 
Managing Wealth
More Ways to Evaluate Portfolio Performance
The Jensen measure is another tool investors use to include risk when measuring portfolio performance. 
Managing Wealth
Understanding Total Returns
Total return measures the rate of return earned from an investment over a period of time. 
Markets
The Most Accurate Way To Gauge Returns: The Compound Annual Growth Rate
The compound annual growth rate, or CAGR for short, represents one of the most accurate ways to calculate and determine returns for individual assets, investment portfolios and anything that ... 
Managing Wealth
How To Measure Returns On The Series 65 Exam
An investor who is evaluating the performance of a portfolio manager must take into consideration the impact that any contributions or withdrawals made by the investor will have on the overall ...

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