The gain or loss on an investment over a period, expressed as a percentage.
Rate of return measures how much an investment has grown or declined, expressed as a percentage of the original investment. If you invest $10,000 and it grows to $11,000 in one year, your return is 10% [($11,000–$10,000)/$10,000]. Returns can be positive (gains) or negative (losses). When comparing investments, annualized return (average return per year) is useful for different time periods. Historical stock market returns average around 10% annually; bonds average 5–6%; savings accounts currently 4–5%. Understanding your rate of return helps evaluate whether your investments are meeting expectations. Average return ignores volatility—two investments with the same average return can feel very different if one is stable and the other swings wildly. This is why volatility matters alongside return.