Investment Return Calculator

About this Investment Return Calculator

The Investment Return Calculator compares an ending investment value with its starting value and expresses the gain or loss as a percentage of the original investment. It is a quick performance measure rather than a full annualized return model.

Simple return on investment (ROI) measures gain or loss as a percentage of the original amount invested, giving a quick, standardized way to compare the performance of very different investments on the same relative scale.

For related tasks, try Compound Interest Calculator, Savings Goal Calculator or Percentage Change Calculator.

How the calculation works

ROI is calculated as (final value − initial value) ÷ initial value × 100. It does not adjust for the length of time, cash flows, taxes, fees or inflation.

How to use it

1. Enter the initial investment value.
2. Enter the final value.
3. Calculate to see gain or loss and ROI percentage.

Practical example

An investment that grows from 5,000 to 6,000 gains 1,000 and has a simple ROI of 20%.

An investment of 5,000 that grows to 6,500 has a gain of 1,500 and a simple ROI of 30%, but if that growth took 5 years rather than 1, the annualized return would be closer to 5.4% per year, a much less dramatic figure once time is factored in.

Things to double-check

This basic ROI calculation doesn't account for the time period over which the return occurred, so a 20% return over 1 year is a much stronger result than the same 20% return over 5 years; annualized return is more meaningful for comparing different holding periods.

Gain, ROI and what they miss

Return on investment is the gain divided by the amount you invested. If you buy for 150,000 and sell for 189,000, the gain is 39,000 and the ROI is 26 percent. That figure ignores time. If the 26 percent took two years, the equivalent yearly growth is about 12.2 percent, because 1.26 raised to the power of one half is about 1.1225. If it took five years, the yearly growth is only about 4.7 percent. The calculator gives the total return, so when you compare investments held for different lengths of time, convert each to a yearly rate before judging which was better.

Costs that change the real return

The gross gain is rarely what you keep. Brokerage and platform fees, taxes on gains, currency conversion costs and inflation all reduce the real return. Suppose in the example above you pay 2,000 in fees and 5,000 in tax. Your net gain falls to 32,000 and the ROI falls to about 21.3 percent. Inflation then reduces what that money can buy. When you enter figures, use the final value after selling costs if you want a net result, and include any dividends or interest you received along the way, since they belong to the return.

Using ROI to compare options

ROI is useful for comparing results, but only on a like-for-like basis. Compare the same time period, include the same costs and remember that risk is not shown in the number: two investments can have the same ROI while one was far more volatile. Do not judge an asset by a single good year. Losses are also uneven: a 20 percent loss needs a 25 percent gain to get back to where you started, because 1 divided by 0.80 is 1.25. Keep records of purchase dates, prices and fees so you can recalculate accurately later.

Keeping a simple investment record

Good records make return calculations reliable. For each holding, write down the purchase date, the amount invested including fees, any dividends or interest received, and the sale value when you exit. Suppose you invested 150,000, received 6,000 in dividends and sold for 189,000. The total gain is 45,000, which is a 30 percent return, noticeably higher than the 26 percent price gain alone. Without that record it is easy to forget income and overstate or understate what you earned. Include currency rates too if you invested abroad.

Turning a total return into a yearly rate

To compare investments held for different periods, convert the total return into a compound annual growth rate. The formula is the final value divided by the initial value, raised to the power of one over the number of years, minus one. A growth from 150,000 to 189,000 over 3 years gives 1.26 to the power of one third, which is about 1.08, or roughly 8 percent a year. The same 26 percent over 6 years would be only about 3.9 percent a year. Compare the yearly rate with the inflation rate and with a safe alternative such as a savings account to judge whether the risk was worth taking.

Worked example: shares with fees and dividends

Suppose you buy 200 shares at 48 each, which costs 9,600, plus a 20 brokerage fee, so your total cost is 9,620. Over three years the company pays dividends of 2 per share each year, a total of 1,200. You then sell at 56 per share for 11,200 and pay another 20 in fees, which leaves 11,180. In total you received 11,180 plus 1,200, which is 12,380. The gain is 12,380 minus 9,620, or 2,760, so the return on investment is 28.7 percent. Spread over three years, that is about 8.8 percent a year. The price rise alone was 16.7 percent, so dividends and fees both changed the answer noticeably.

Risk and return go together

A higher expected return usually comes with a higher chance of loss. A savings account may pay a modest, steady rate, while shares can rise or fall by 20 percent or more in a year. Two investments with the same average return can feel very different if one swings widely. Diversification, meaning spreading money across many assets, reduces the damage from any single failure but does not remove market risk. Your time horizon matters as well: money you need within a few years should not depend on a volatile asset, while money for twenty years from now can usually ride out downturns. Before you invest, decide how much of a fall you could accept without selling in a panic.

Worked example: a rental property

Return calculations also apply to property. Suppose you buy a flat for 200,000 and collect 1,000 a month in rent, which is 12,000 a year. After 3,000 a year of repairs, insurance and fees, the net rent is 9,000. After five years you sell for 230,000. Total net rent is 45,000 and the price gain is 30,000, so the total gain is 75,000, a return of 37.5 percent on 200,000, or about 6.6 percent a year. This ignores the cost of buying and selling, taxes, any mortgage interest and the time you spent managing the flat, all of which reduce the real return. If you borrowed part of the price, calculate the return on your own money, not on the full price.

Common mistakes when judging returns

The most frequent mistake is to look at the total return without the time it took. Others include ignoring fees and taxes, forgetting dividends and interest, comparing a risky investment with a safe one as if they were equal, and judging a fund by its best recent year. Survivorship bias is another trap: lists of top funds leave out those that closed after poor results. Be wary of any promise of high guaranteed returns, which is a common feature of scams. Keep records of dates, prices, fees and income so that you can recalculate accurately, and compare results with a sensible benchmark, such as a broad market index or a savings rate.

Key terms explained

Return on investment measures the gain as a share of the amount invested. Total return includes price changes plus income such as dividends and interest. The annualised return converts a multi-year gain into a yearly rate, and the compound annual growth rate does so with compounding. A dividend yield is the yearly dividend divided by the share price. An expense ratio is the yearly fee charged by a fund. Volatility describes how much the value moves up and down, and a benchmark is an index or rate that you compare your results with.

Rules of thumb and quick checks

Use the rule of 72 to estimate how long an investment takes to double. Remember the effect of fees: a fund that earns 7 percent before fees and charges 1 percent leaves 6 percent, and over 30 years the final value is about 25 percent lower than at 7 percent, because 1.06 to the power of 30 is 5.74 against 7.61. To recover from a loss of 30 percent you need a gain of about 43 percent. Compare an investment's annualised return with inflation and with a low-risk alternative before you judge whether the risk was worth it.

Frequently asked questions