1. What is a Lump Sum Investment Return Calculator?

Definition: This calculator determines the percentage return on a lump sum investment by comparing the future value to the original principal.

Purpose: It helps investors evaluate the performance of their investments and compare different investment opportunities.

2. How Does the Calculator Work?

The calculator uses the formula:

Where:

• \( \text{Return} \) — Percentage return on investment
• \( FV \) — Future value of the investment ($)
• \( P \) — Principal amount invested ($)

Explanation: The formula calculates the profit (FV - P) as a percentage of the original investment (P).

3. Importance of Investment Return Calculation

Details: Understanding your investment return helps assess performance, make informed decisions, and compare different investment options.

4. Using the Calculator

Tips: Enter the future value of your investment and the original principal amount. The principal must be greater than $0.

5. Frequently Asked Questions (FAQ)

Q1: What's considered a good return on investment?
A: This depends on the investment type and timeframe. Generally, returns above inflation (2-3%) are positive, while 7-10% is considered good for long-term stock investments.

Q2: Does this calculator account for time?
A: No, this calculates simple return. For annualized return (accounting for time), you would need additional information about the investment period.

Q3: Can I use this for negative returns?
A: Yes, the calculator will show negative percentages if FV is less than P.

Q4: What's the difference between this and ROI?
A: This is essentially the same as ROI (Return on Investment), just expressed as a percentage.

Q5: Should I include dividends in FV?
A: Yes, the future value should include all returns (price appreciation plus any dividends or distributions).