Percent Return Calculator
Calculate your total return on investment (ROI) and percentage growth.
What is Percent Return?
Percent return, often referred to as Return on Investment (ROI), is a financial metric used to evaluate the efficiency or profitability of an investment. It measures the amount of return on an investment relative to the investment's cost. Whether you are trading stocks, investing in real estate, or purchasing a business, understanding your percent return is critical for managing your portfolio.
The Percent Return Formula
To calculate the return on investment manually, use the following formula:
Key Components of the Calculation
- Initial Investment: The total amount of capital used to purchase the asset initially.
- Current/Final Value: The market value of the asset at the time of calculation or the sale price.
- Income Earned: Any additional cash flow generated by the asset, such as dividends from stocks or rental income from property.
- Fees: Costs incurred during the buying or selling process that reduce your net profit.
Real-World Example
Imagine you purchased shares of a company for $1,000. Over the year, you received $50 in dividends. At the end of the year, the shares are worth $1,100, and you paid $10 in brokerage fees.
- Total Gain = ($1,100 + $50 – $10) – $1,000 = $140
- Percent Return = ($140 / $1,000) × 100 = 14%
Why Percent Return Matters
Using a percentage rather than a dollar amount allows you to compare different investments of varying sizes. A $500 profit might seem better than a $100 profit, but if the $500 required a $10,000 investment (5% return) and the $100 only required a $500 investment (20% return), the smaller dollar amount is actually the superior investment performance.