function calculateROR() {
var startBal = parseFloat(document.getElementById('startBalance').value);
var endBal = parseFloat(document.getElementById('endBalance').value);
var contrib = parseFloat(document.getElementById('contributions').value);
var errorMsg = document.getElementById('errorMessage');
var resultSec = document.getElementById('resultSection');
// Reset display
errorMsg.style.display = 'none';
resultSec.style.display = 'none';
// Validation
if (isNaN(startBal) || isNaN(endBal) || isNaN(contrib)) {
errorMsg.style.display = 'block';
errorMsg.innerHTML = "Please enter valid numbers for all fields.";
return;
}
if (startBal < 0 || endBal < 0 || contrib 0) {
// Edge case: Started with 0 and contributed 0 but somehow made money?
ror = 100;
} else {
ror = 0;
}
// Formatting currency
var formatter = new Intl.NumberFormat('en-US', {
style: 'currency',
currency: 'USD',
});
document.getElementById('displayGain').innerHTML = formatter.format(gain);
document.getElementById('displayAvgCap').innerHTML = formatter.format(avgCapital);
document.getElementById('displayROR').innerHTML = ror.toFixed(2) + "%";
// Show results
resultSec.style.display = 'block';
}
Understanding Your 401k Personal Rate of Return
Calculating the performance of your 401k is distinct from looking at the performance of the mutual funds you are invested in. While a specific fund might report a 10% annual return, your personal rate of return depends on when money entered the account.
Unlike a static savings account, a 401k is dynamic. You are likely making bi-weekly contributions, and your employer may be adding matching funds. Because this money is added gradually throughout the year, calculating your return isn't as simple as subtracting the start balance from the end balance.
The Calculation Logic
This calculator uses a simplified version of the Modified Dietz Method, which is the industry standard for estimating personal investment performance without needing complex daily transaction data. The logic is as follows:
Net Gain: This is calculated by taking your Ending Balance and subtracting both your Beginning Balance and your Total Contributions (Employee + Employer). This isolates the actual market growth (or loss).
Average Capital Invested: Because your contributions didn't sit in the account for the entire year, we cannot simply divide the gain by the starting balance. Instead, we assume contributions were made evenly throughout the period. We calculate the denominator as: Beginning Balance + (Total Contributions / 2).
Rate of Return: The Net Gain is divided by the Average Capital Invested to give you a percentage that reflects how hard your money worked for you.
Why Does This Matter?
Knowing your personal rate of return allows you to:
Benchmark Effectively: Compare your portfolio's growth against standard benchmarks like the S&P 500 or a Target Date Fund index.
Evaluate Fees: If your funds have high expense ratios, they will drag down your personal return over time.
Assess Risk: If your personal return fluctuates wildly compared to the broader market, your asset allocation might be too aggressive for your timeline.
Data Needed for Calculation
To use the calculator above, you will need your 401k quarterly or annual statement. Locate the following figures:
Beginning Balance: The value of the account on the first day of the period (e.g., Jan 1st).
Ending Balance: The value of the account on the last day of the period (e.g., Dec 31st).
Total Contributions: Look for a section labeled "Activity" or "Transaction Summary." Add up "Employee Deferrals" and "Employer Match." Do not include investment gains in this number.