Rate of Return Percentage Calculator

Investment Performance

Total Gain/Loss

$0.00

Percentage Return

0.00%

function calculateInvestmentReturn() { var initial = parseFloat(document.getElementById('initialValue').value); var current = parseFloat(document.getElementById('currentValue').value); var income = parseFloat(document.getElementById('dividendsIncome').value) || 0; var resultsDiv = document.getElementById('rorResults'); var profitDisplay = document.getElementById('totalProfit'); var percentDisplay = document.getElementById('percentageReturn'); if (isNaN(initial) || isNaN(current) || initial <= 0) { alert('Please enter valid positive numbers for the initial investment.'); return; } var totalGain = (current – initial) + income; var rateOfReturn = (totalGain / initial) * 100; profitDisplay.innerText = '$' + totalGain.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2}); percentDisplay.innerText = rateOfReturn.toFixed(2) + '%'; if (rateOfReturn < 0) { percentDisplay.style.color = '#dc3545'; } else { percentDisplay.style.color = '#28a745'; } resultsDiv.style.display = 'block'; }

Understanding Rate of Return (RoR)

The Rate of Return (RoR) is the net gain or loss of an investment over a specified period, expressed as a percentage of the investment's initial cost. It is a critical metric for investors to evaluate the efficiency of their capital allocation across various assets like stocks, real estate, or business ventures.

How to Calculate Rate of Return

The basic formula for calculating the percentage rate of return is:

RoR = [(Current Value – Initial Value) + Dividends/Income] / Initial Value * 100

Example Calculation

Imagine you purchased shares of a company for $1,000. One year later, the market value of those shares is $1,150, and you received $30 in dividends during that period.

• Initial Value: $1,000
• Current Value: $1,150
• Dividends: $30
• Net Profit: ($1,150 – $1,000) + $30 = $180
• Rate of Return: ($180 / $1,000) * 100 = 18.00%

Why RoR Matters for Investors

Calculating the rate of return allows you to compare different investment opportunities on an "apples-to-apples" basis. For instance, a $500 gain on a $5,000 investment (10% RoR) is technically more efficient than a $1,000 gain on a $20,000 investment (5% RoR), despite the dollar amount being lower.

Key Considerations

While the standard RoR is excellent for quick comparisons, seasoned investors also consider:

• Timeframe: RoR doesn't inherently account for time. A 10% return in 1 month is vastly different from a 10% return in 5 years.
• Inflation: Real rate of return subtracts the inflation rate to show the actual increase in purchasing power.
• Taxes and Fees: Net RoR should ideally account for brokerage fees and capital gains taxes for a more realistic view of wealth growth.