Risk vs Return is a fundamental investment concept that describes the relationship between the potential reward of an investment and the level of risk involved. Generally, investments with higher potential returns come with greater risk, while safer investments typically offer lower returns. The key to successful investing is finding the right balance between risk and return that aligns with your financial goals and risk tolerance.

The Sharpe Ratio, developed by Nobel laureate William Sharpe, is one of the most widely used metrics for evaluating risk-adjusted returns. It measures how much excess return you receive for the extra volatility you endure. A higher Sharpe Ratio indicates that an investment provides better returns relative to the risk taken, making it easier to compare different investment options on a level playing field.

Start by entering the risk-free rate, typically the current treasury bond yield. Then add your investment options with their expected returns and risk levels (standard deviation). The calculator will compute the Sharpe Ratio for each investment and rank them by risk-adjusted performance.