Rate of return is a measurement of the gain or loss of an asset during the time owned and is expressed usually as a percentage. That number can also be presented in the annualized form. It is important to understand that a true rate of return only occurs when an asset is sold or disposed of in some way. The ownership of the asset has ended.
Unrealized gains or losses are ultimately imaginary in today’s world. Projections are simply best guesses. The massive changes in the conditions of both national and global markets may continue for some time. Volatility creates big movements in asset prices which is why the end result is the only one that counts.
The buy and hold strategy may not be the best in today’s world. it would make more sense to manage a portion of your portfolio trying to take regular gains on on a more timely basis. If possible, it would be good if they were long term but take short term gains when appropriate. Be careful holding losses long term. If necessary take losses on a more timely basis also. The other part of your portfolio could be designated to hold long term. You need to constantly monitor your portfolio nowadays.
You may see the word “real return” sometimes used to account for inflation which can depreciate your return in terms of intrinsic value or “purchasing power”. For instance, if inflation is running at 2% and you have a gain of 2% on the sale of an asset, in “real” or “adjusted” terms, your gain is 0%.
Note: If you add more money to an existing investment, it simply creates an additional investment with its own cost basis and date of acquisition. Do not factor that in as return. it is principal, not a cash distribution or gain. It may not create value and its individual rate of return will probably be different than the original principal investment. A cash distribution or dividend directly from an asset is a return. Be careful if you do reinvest a dividend or other funds into an existing investment. It is new money (principal) into the investment. An asset can appear to be increasing when it may actually be going down and that decline is masked by the additional money (principal) being added to the investment. That can sometimes happen to pension accounts as they receive additional contributions.