Rate of Return Calculator
Calculate the total and annualized rate of return on an investment. Include dividends or other income and any holding period in years.
Calculator by Toolsloft ↗- Total return
- 55%
- Annualized return
- 15.73%
- Total gain
- $550.00
The rate of return tells you how well an investment performed. This calculator shows the total return over the whole holding period and the annualized return, the steady yearly rate that would produce the same result, so you can compare investments held for different lengths of time on equal footing.
How this is calculated
Total gain is the ending value plus any income received minus the amount invested. Total return is that gain divided by the initial investment, as a percentage. Annualized return is the compound annual growth rate: ((ending value + income) / initial)^(1 / years) - 1, expressed as a percentage. Income is treated as received at the end, a standard simplification.
How to use
- Enter the initial amount you invested.
- Enter the final value and any income received such as dividends or interest.
- Enter the holding period in years to see total and annualized return.
Examples
- $1,000 grows to $1,500 plus $50 income over 3 years:
Total return 55%, annualized 15.73% - $2,000 falls to $1,800 over 2 years:
Total return -10%, annualized -5.13%
FAQ
- What is the difference between total and annualized return?
- Total return is the full percentage gain over the entire holding period. Annualized return converts that into an equivalent yearly compound rate, which is the fair way to compare investments held for different amounts of time.
- Should I include dividends?
- Yes. Add dividends, interest, or other cash received to the income field so the return reflects the full profit, not just the price change.
- How is annualized return different from a simple average?
- Annualized return compounds, so it accounts for growth building on itself each year. A simple average of yearly returns overstates performance when returns vary.