Investor's Rate of Return Calculator
Analyze the efficiency of your capital allocation and growth performance.
Investment Analysis Summary
Total Return on Investment
0.00%
Annualized Rate (CAGR)
0.00%
Net Profit/Loss
$0.00
Total Capital Deployed
$0.00
Understanding the Investor's Rate of Return
For any serious investor, measuring performance goes beyond looking at simple price appreciation. The "Investor's Rate" is a comprehensive metric that accounts for initial capital, ongoing costs, periodic income (like dividends or rent), and the time horizon of the investment.
Key Metrics Defined
- Total Return on Investment (ROI): The absolute percentage gain or loss generated on the total capital deployed over the entire life of the investment.
- Annualized Rate (CAGR): This is perhaps the most important metric. It represents the geometric mean return that provides the same total return over the time period as if the investment had compounded at a steady rate. It allows investors to compare different assets (like stocks vs. real estate) on a level playing field.
- Net Profit: The actual cash remaining after accounting for all income received and subtracting every dollar of initial capital and maintenance expenses.
Calculation Logic
The calculator uses the following mathematical framework:
Total Cost = Initial Capital + Administrative Costs
Total Gain = Current Valuation + Periodic Income
Total ROI % = ((Total Gain – Total Cost) / Total Cost) * 100
Annualized Rate % = ((Total Gain / Total Cost) ^ (1 / Years) – 1) * 100
Total Gain = Current Valuation + Periodic Income
Total ROI % = ((Total Gain – Total Cost) / Total Cost) * 100
Annualized Rate % = ((Total Gain / Total Cost) ^ (1 / Years) – 1) * 100
Practical Example
Imagine you purchased a private equity stake for $100,000. Over 4 years, you paid $2,000 in legal and management fees. During that time, the company paid you $8,000 in dividends. You eventually sold the stake for $140,000.
- Total Capital Deployed: $102,000
- Total Value Realized: $148,000
- Net Profit: $46,000
- Total ROI: 45.10%
- Annualized Rate: 9.76%
This "Investor's Rate" of 9.76% gives you a clear benchmark to compare against the S&P 500 or other alternative investment opportunities.