What's the difference between total return and price return?

Price return only measures stock price change. Total return includes price appreciation plus dividends reinvested. For dividend-paying stocks, total return significantly exceeds price return over time. The S&P 500 averages 7% price return but 10% total return when including reinvested dividends—a huge difference over decades.

How do I calculate annualized return?

Annualized return accounts for time, allowing comparison between investments of different durations. Formula: [(Ending Value ÷ Beginning Value) ^ (1 ÷ Years)] - 1. A 100% return over 5 years is 14.87% annualized, not 20%. Annualized return provides accurate performance measurement for comparing investments.

What's a good stock market return?

Historical S&P 500 returns average 10% annually including dividends, or 7% after inflation. Individual stocks vary dramatically—some return 20%+, others lose money. Expect 8-12% for diversified portfolios. Returns vary by year—some years gain 25%+, others lose 20%+. Focus on long-term average, not short-term fluctuations.

Should I calculate returns before or after taxes?

Calculate both. Pre-tax returns show investment performance. After-tax returns show actual wealth building. Taxes significantly impact returns—15-20% capital gains tax and dividend taxes reduce returns. This is why tax-advantaged accounts (401k, IRA, HSA) are powerful—you keep the full return without annual tax drag.