Investment Return Calculator

This measures what an investment returned between two points in time. It reports the total return over the whole holding period, the compound annual rate that would have produced the same result, the profit or loss in dollars, and the basis — everything you actually committed, with any fees counted in. The annualised figure is the one given prominence, because a total return cannot be compared between investments held for different lengths of time. Where no holding period is entered there is no annual rate to report, and that row is removed rather than filled in with a zero.

Return on investment is a simple ratio: what you made, over what you put in. The difficulty is not the arithmetic, it is that the resulting number is routinely quoted in a form that cannot be compared with anything.

A total return of 50% is a complete statement about a $10,000 investment now worth $15,000, and it is nearly useless on its own, because it does not say how long it took. Held for five years, that is 8.45% a year compounded. Held for twenty, the same 50% is 2.05% a year. Held for one, it is 50%. Three wildly different investments producing an identical headline figure. That is why this page leads with the annual rate wherever a holding period is available, and why the label always names which of the two figures is on screen.

The annual figure has a limitation of its own, and it is worth stating plainly rather than burying. A compound annual growth rate is derived from the starting value and the ending value and nothing else. It is blind to the path. An investment that halved, then tripled, reports the same steady-looking annual rate as one that rose evenly every year, and if you were the person holding it through the halving those are not remotely the same experience. The figure is the right one for comparison. It is the wrong one for understanding what happened.

Fees deserve more attention than they usually get, because their effect is larger than their size. This page counts costs into the basis rather than subtracting them from the profit, which is the correct treatment — money spent to acquire a position is money you committed. But it means both parts of the ratio move against you at once: the denominator rises and the numerator falls. On $10,000 becoming $15,000, adding $250 of costs — 2.5% of the amount invested — takes the reported return from 50% to 46.34%. A fall of 3.66 percentage points from a 2.5% cost. Raise the costs to $500 and the return falls to 42.86%. The annual figure moves too, from 8.45% to 7.91% to 7.39%.

What none of this does is predict anything. Every figure on the page describes a result that has already happened, and a return achieved over one period is not evidence that the same return is available over the next. That is not a disclaimer bolted on for form's sake; it is the specific thing US securities regulation identifies as the misleading use of performance data. Rule 156 flags representations implying that future gains may be inferred from past performance, and Rule 482 requires a fund advertising performance to state in the body of the advertisement — explicitly not in a footnote — that past performance does not guarantee future results. Neither rule governs a calculator. Both describe how a measurement like this one should be read.

The basis is $10,000 and the final value is $15,000, so the profit is $5,000 and the total return is 50% of what was put in.

The annual figure is 8.45%. That is the constant compound rate which, applied for five years, would have turned $10,000 into $15,000 — and it is the number to use if you are comparing this against anything else, because it accounts for the time the money was tied up.

Change only the holding period and watch the total return stay fixed while the meaningful figure collapses. The same $10,000 to $15,000 over twenty years is still 50% in total, but 2.05% a year. Over a single year it is 50% in total and 50% a year. Nothing about the money changed; the quality of the investment changed enormously. This is the entire reason a total return cannot be quoted on its own.

Now add costs. Suppose $250 went on commissions and fees. The basis rises to $10,250, the profit falls to $4,750, and the reported return drops from 50% to 46.34% — with the annual figure falling from 8.45% to 7.91%. The costs were 2.5% of the amount invested and cost 3.66 percentage points of reported return, because they raise the denominator and lower the numerator at the same time. At $500 of costs the basis is $10,500, the profit $4,500, the return 42.86% and the annual rate 7.39%.

A loss is reported the same way and labelled honestly. $10,000 that became $8,000 over three years is a loss of $2,000, a total return of −20%, and an annualised −7.17% — that last figure being the constant annual rate that would have produced the same fall.

A second scenario, to show the figures hold at a different scale: $25,000 invested with $500 of costs, worth $40,000 after seven years. The basis is $25,500, the profit $14,500, the total return 56.86%, and the annual rate 6.64%. Note that a larger total return than the first example (56.86% against 50%) comes with a lower annual rate (6.64% against 8.45%), purely because it took seven years instead of five. Reading the totals alone would rank these two backwards.

And the case where this page refuses to answer. Leave the holding period empty and the total return still shows — 50% needs no timeframe — but the annualised row disappears entirely. That is deliberate. A 50% gain could have taken one year or twenty, those are radically different results, and there is no annual rate for an investment whose duration is unknown. Printing 0%, or a dash with a footnote, would both read as a computed answer.