# What is the difference between return and interest?

**Return:** The percentage of loss & gain generated by an investment in return. A return is an internal measure to the investor.

**Formula:** Ending value of investment - Beginning value of investment / Beginning Value of investment x 100

**Interest:** The cost of borrowing or lending money is interest. Interest is an external measure that relates to the cost of getting money from a lender.

Simple interest formula is given:

** SI = (P × R ×T) / 100**

where

SI = simple interest

P = principal

R = interest rate (in percentage)

T = time duration (in years)

The compound interest formula is given as:

** A = P(1+R/n) ^{nt}**

Where,

A = amount

P = principal

R = rate of interest

n = number of times interest is compounded per year

t = time (years)