No financial plan is worthwhile without learning the rate of return on investments or savings. You need to know it to determine the amount of savings needed every months to meet a commitment (goal). In order not to be duped / tricked by someone, you must know the real rate of return Vs Offered rate of return. If you are a tax paying assesse, you would need to know the taxable equivalent return and after tax return so that taxes do not eat away your profits. When a lump sum is offered in return to your lending, you will love to know the effective annual rate. When you get an offer to buy a government secured security at a discount, you will surely wish to know the effective Yield to maturity.
- At what rate should I save to get an assured sum in future
- Is this investment better than tax free investment
- What is the real rate of return on this investment
- What is my effective annual yield?
- How much will I gain if I hold this investment for a long time?
- What is the yield to maturity of my bond?
- How my stock is faring compared to the Market?
- What are my returns after paying taxes?
- How do taxes and inflation impact my return?