The Rate of Return (RoR) is a fundamental metric used in finance and investing to measure the profitability of an investment over a specific period. It expresses the gain or loss on an investment as a percentage of its initial cost. Understanding your RoR helps you compare different investment opportunities, assess the performance of your portfolio, and make informed decisions about where to allocate your capital.
The basic formula for calculating the Rate of Return is:
Beginning Value: This is the initial amount you invested or the cost basis of your investment.
Ending Value: This is the current market value of your investment or the price at which you sold it.
Period: The RoR is calculated over a specific time frame (e.g., one year, five years). While this calculator doesn't explicitly ask for the period, the values you input should reflect the beginning and ending values for the desired timeframe.
A positive RoR indicates a profitable investment, while a negative RoR signifies a loss. The higher the percentage, the better the investment has performed relative to its initial cost.
function calculateRoR() {
var beginningValue = parseFloat(document.getElementById("beginningValue").value);
var endingValue = parseFloat(document.getElementById("endingValue").value);
var resultDiv = document.getElementById("result");
if (isNaN(beginningValue) || isNaN(endingValue) || beginningValue === 0) {
resultDiv.innerHTML = "Please enter valid numbers for both initial investment and current value, and ensure the initial investment is not zero.";
return;
}
var gainOrLoss = endingValue – beginningValue;
var rateOfReturn = (gainOrLoss / beginningValue) * 100;
var resultHTML = "