Percentage Rate of Return Calculator
Calculate the total growth or loss of your investment.
Total Rate of Return
Understanding Percentage Rate of Return
The Percentage Rate of Return (RoR) is the net gain or loss of an investment over a specified time period, expressed as a percentage of the investment's initial cost. It is a fundamental metric used by investors to evaluate the performance of stocks, bonds, real estate, or any capital asset.
The Rate of Return Formula
Rate of Return = [(Current Value – Initial Investment) + Dividends] / Initial Investment * 100
Real-World Example
Imagine you purchase 10 shares of a company at 100.00 per share (Initial Investment = 1,000). A year later, the shares are worth 120.00 each (Current Value = 1,200). During that year, the company paid you 50.00 in total dividends.
- Step 1: Calculate Net Gain: (1,200 – 1,000) + 50 = 250
- Step 2: Divide by Initial Cost: 250 / 1,000 = 0.25
- Step 3: Convert to Percentage: 0.25 * 100 = 25%
In this scenario, your total percentage rate of return is 25%.
Why Calculate Your Return?
Tracking your percentage return allows you to compare different investments on an equal playing field. While a 500 gain on a 1,000 investment is impressive (50%), a 500 gain on a 10,000 investment is much smaller (5%). Percentage returns provide the context needed for smart portfolio management.