What is the definition of an investment return?

Question

Is it just the profit or all the money you get back including the money you invested?

Answer 1

Its the amount of profit returned less fees and taxes. If you invest $10,000 into a bond and after 1 year you earn $350, your profit was $350. But after broker fees are taken out and taxes you realize a gain of $287 your ROI (return on invesntment) is $287 or 2.87%.

Example:

ROI = $350 - $63/$10,000

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Answer 2

A "return" is just the amount of money received over and above the amount of money spent on the investment.

To confound the issue, there are several kinds of returns unfortunately. EBIT (earnings before interest and tax) for example, is one kind of return. In this case, the gross earnings (E) are found by taking the gross income and subtracting out the investment costs. Then, to find the return, you must further take out interest paid and taxes paid.

R = cash in - cash out = return; where cash out = investments + tax + interest Typically returns are cited as a percent of investments, which is 100% X (R/investments) = %R (note interest and taxes are not included in the basis). In a publicly held company, returns (R) may be distributed to the stockholders as dividends. In which case, we often call the returns "profits."