.calc-wrapper {
background: #f9f9f9;
border: 1px solid #e0e0e0;
border-radius: 8px;
padding: 25px;
box-shadow: 0 4px 6px rgba(0,0,0,0.05);
margin-bottom: 30px;
}
.calc-title {
text-align: center;
margin-bottom: 20px;
color: #2c3e50;
font-size: 24px;
font-weight: 700;
}
.form-group {
margin-bottom: 15px;
}
.form-label {
display: block;
margin-bottom: 5px;
font-weight: 600;
color: #555;
}
.form-input {
width: 100%;
padding: 10px;
border: 1px solid #ddd;
border-radius: 4px;
font-size: 16px;
box-sizing: border-box;
}
.form-input:focus {
outline: none;
border-color: #3498db;
box-shadow: 0 0 0 2px rgba(52, 152, 219, 0.2);
}
.calc-btn {
width: 100%;
padding: 12px;
background-color: #27ae60;
color: white;
border: none;
border-radius: 4px;
font-size: 18px;
font-weight: 600;
cursor: pointer;
transition: background-color 0.2s;
margin-top: 10px;
}
.calc-btn:hover {
background-color: #219150;
}
.results-box {
margin-top: 25px;
background: #fff;
border: 1px solid #ddd;
border-radius: 4px;
padding: 20px;
display: none;
}
.result-row {
display: flex;
justify-content: space-between;
padding: 10px 0;
border-bottom: 1px solid #eee;
}
.result-row:last-child {
border-bottom: none;
}
.result-label {
color: #666;
}
.result-value {
font-weight: 700;
color: #2c3e50;
}
.highlight-result {
color: #27ae60;
font-size: 1.2em;
}
.content-section {
line-height: 1.6;
margin-top: 40px;
}
.content-section h2 {
color: #2c3e50;
margin-top: 30px;
}
.content-section p {
margin-bottom: 15px;
}
.content-section ul {
margin-bottom: 15px;
padding-left: 20px;
}
.formula-box {
background: #edf2f7;
padding: 15px;
border-left: 4px solid #3498db;
font-family: monospace;
margin: 20px 0;
overflow-x: auto;
}
function calculateROI() {
// Get input values
var initial = document.getElementById('initialInvestment').value;
var final = document.getElementById('finalValue').value;
var years = document.getElementById('yearsHeld').value;
// Validate inputs
if (initial === "" || final === "" || years === "") {
alert("Please fill in all fields to calculate the return.");
return;
}
var initialNum = parseFloat(initial);
var finalNum = parseFloat(final);
var yearsNum = parseFloat(years);
if (initialNum <= 0 || yearsNum <= 0) {
alert("Initial investment and years must be greater than zero.");
return;
}
// Calculation Logic
// 1. Total Profit
var totalProfit = finalNum – initialNum;
// 2. Simple ROI (Cumulative Return %)
// Formula: (Profit / Initial) * 100
var simpleROI = (totalProfit / initialNum) * 100;
// 3. Annualized Rate of Return (CAGR)
// Formula: ((Final / Initial) ^ (1 / Years)) – 1
var annualizedReturnDec = Math.pow((finalNum / initialNum), (1 / yearsNum)) – 1;
var annualizedReturnPerc = annualizedReturnDec * 100;
// Display Results
document.getElementById('totalProfitDisplay').innerHTML = "$" + totalProfit.toLocaleString('en-US', {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('simpleRoiDisplay').innerHTML = simpleROI.toFixed(2) + "%";
document.getElementById('annualizedDisplay').innerHTML = annualizedReturnPerc.toFixed(2) + "%";
// Show results container
document.getElementById('results').style.display = "block";
}
How to Calculate Annual Rate of Return on Investment
Calculating your investment performance is crucial for making informed financial decisions. While a simple percentage gain tells you how much you made in total, it doesn't account for the time it took to achieve that gain. This is why knowing how to calculate the annual rate of return (often referred to as the Annualized ROI or Compound Annual Growth Rate – CAGR) is essential for comparing investments of different durations.
The Difference Between Simple ROI and Annualized Return
Before diving into the formulas, it is important to distinguish between two common metrics:
- Total Return (Simple ROI): This measures the absolute percentage growth from start to finish. It does not care if the growth took 1 year or 20 years.
- Annualized Return (CAGR): This calculates the geometric average amount the investment grew each year. It "smooths out" the volatility to show you a steady annual growth rate.
For example, a 50% total return over 10 years is actually quite low annually (about 4.14%), whereas a 50% return over 2 years is excellent (about 22.47% annually).
The Annualized Rate of Return Formula
To calculate the annual rate of return manually, you use the CAGR formula. The mathematical equation is:
Annualized Return = ( ( Final Value / Initial Value ) ^ ( 1 / n ) ) – 1
Where:
- Final Value: The amount the investment is worth at the end of the period.
- Initial Value: The amount of your original investment.
- n: The number of years the investment was held.
Example Calculation
Let's say you invested $10,000 in a stock portfolio. After 5 years, your portfolio is worth $15,000.
1. Divide Final by Initial: 15,000 / 10,000 = 1.5
2. Calculate the exponent (1/n): 1 / 5 = 0.2
3. Apply the exponent: 1.5 ^ 0.2 ≈ 1.08447
4. Subtract 1: 1.08447 – 1 = 0.08447
5. Convert to percentage: 0.08447 * 100 = 8.45%
Your annualized rate of return is 8.45%. Even though you made a 50% total profit, your money compounded at a rate of roughly 8.45% per year.
Why Use Annualized Return?
Using the calculator above helps you standardize performance metrics. It allows you to compare a real estate investment held for 15 years against a stock market investment held for 3 years. By converting everything to an "annual" rate, you create an apples-to-apples comparison.
Limitations
This calculation assumes a lump sum investment at the beginning and no additional contributions or withdrawals during the period. For investments with regular cash flows (like monthly deposits), a more complex metric called the Internal Rate of Return (IRR) or Money-Weighted Return would be more accurate.