The total amount an investor gets back from an investment. Annual return lets you know what you made during a year. Cumulative return is the all-time number. There's no time limit.
Your grandpa bought some magic beans in 1968 for $4. Since then, he went up the beanstalk every few years to collect some gold from the giant. He got $22 in gold in 1972, $53 in 1978, $75 in 1984 and $40 in 1987. In 1991, he sold his beanstalk rights for $400.
So he gathered $190 in gold from 1972 to 1987, and then brought in $400 from the sale, for a total of $590. Subtract the $4 he spent on the initial beans. His cumulative return was $586. That's a giant return.
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Finance: What Is a Real Return?67 Views
finance- a la shmoop. what is a real return? like is there a fake return? you
know like the news? well kinda .real return refers to an [man frowns talking to camera]
investment return mapped against inflation. so let's say you invest in a
bond that pays five percent a year for ten years and then pays you back your
principal .boring but nice- you know like a good doctor visit. your nominal return
over that period was 5% but since inflation was 3% a year during that
period on average your real return was only 2% a year- meaning that the
performance of your investment only eked out a 2% net gain against the price of [equation]
milk gas and you know knocked off iPhones. so don't be a chump who thinks
that they're making more money than they really are, and you know keep on keeping
it real. [man sitting in chair, talks to camera]
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