Return is a very important concept in the investment world. It is simply the difference between the money you start off with and the money you end up with. In other words, how your money has grown.
The rate of return is the pace at which you achieve that growth, and is normally expressed as a percentage per year.
The nominal rate of return does not take inflation into account, while the real rate of return is the nominal rate of return less the inflation rate.
E.g.
Nominal rate of return for FD 4%
Inflation 3%
Real rate of return for FD 1% (4% - 3%)
You should learn how your money can work for you to increase over time and to beat inflation.
Your money should give you a real rate of return. This should be your money's job description and your principal financial goal.
Showing posts with label banking and money's job description. Show all posts
Showing posts with label banking and money's job description. Show all posts
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