A one-year timeframe is the most common period for evaluating investment performance. It aligns with tax reporting cycles and makes it easy to compare returns across different asset classes and benchmarks on a standardized basis.

A 20% annual return is above average for most traditional investments. While certain assets may achieve this in a given year, consistently earning 20% annually is exceptionally rare and usually involves substantial risk.

Inflation reduces the purchasing power of your gains. To find your real return, subtract the annual inflation rate from your nominal ROI. For example, a 12% nominal return with 3% inflation yields roughly 9% in real terms.