Investment Return Calculator
About Investment Return Calculator
What Is Investment Return?
Investment return measures how much money you made or lost relative to what you originally put in. It’s the most fundamental metric in finance. Total return includes everything – capital gains, dividends, interest, and any other income generated by the investment. If you bought shares for $2,000 and sold them for $2,600 after receiving $100 in dividends, your total return is $700, or 35%. But raw total return doesn’t tell the whole story. An investment that returned 35% over 2 years performed very differently from one that took 7 years to deliver the same gain.
Annualized Return Explained
Annualized return converts any holding period return into an equivalent yearly rate. The formula is Annualized Return = (1 + Total Return)^(1/Years) - 1. This lets you compare investments held for different periods on an apples-to-apples basis. That 35% return over 2 years works out to about 16.2% annualized, while over 7 years it drops to roughly 4.4% annualized.
How to Use This Calculator
Enter your initial investment amount and the final value (including any reinvested income). Add any dividends or distributions received if they were not reinvested. Specify the holding period in years. The calculator outputs your total return in dollars and as a percentage, plus the annualized return. Use these numbers to benchmark against index funds or other investment options.
Frequently Asked Questions
What is the difference between total return and annualized return?
Total return is the overall percentage gain or loss on an investment. Annualized return converts that into a yearly rate so you can compare investments held for different durations.
Should I include dividends in my return calculation?
Yes, always. Dividends are a significant part of total return, especially for long-term stock investments. Ignoring dividends understates your actual performance.
What is a good annualized return?
For diversified stock portfolios, 7-10% annualized after inflation is historically typical. Individual investments vary widely depending on risk and market conditions.
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