Measure the actual performance of your investment including capital gains and dividends.
Calculation Results
Understanding Total Return
In the world of investing, focusing solely on the price of an asset (capital gains) can be misleading. Total Return provides a comprehensive picture of an investment's performance by combining both the change in market value and any income generated, such as dividends, interest, or distributions.
How the Calculation Works
To calculate the total return, we use the following methodology:
Raw Gain/Loss: Subtract the initial investment from the ending value.
Total Profit: Add all dividends or income received during the holding period to the raw gain/loss.
Total Return Percentage: Divide the Total Profit by the Initial Investment and multiply by 100.
Annualized Return (CAGR): This accounts for the time factor, showing what your yearly growth rate would have been to reach that total return.
The Total Return Formula
Total Return % = [(Ending Value – Initial Value + Dividends) / Initial Value] x 100
Example Calculation
Imagine you purchased shares of a stock for $5,000. After 2 years, the stock is worth $5,800, and during those two years, you received $200 in dividends.
Price Gain: $5,800 – $5,000 = $800
Total Income: $800 + $200 = $1,000
Total Return: ($1,000 / $5,000) = 0.20 or 20%
Annualized Return: Approximately 9.54% per year.
Why Total Return Matters
Total return is critical for comparing different types of assets. For example, a high-growth tech stock might offer high capital gains but zero dividends, while a utility stock might offer low price growth but a high dividend yield. Total return allows you to compare them on an "apples-to-apples" basis to see which truly increased your wealth more effectively.
function calculateTotalReturn() {
var initialValue = parseFloat(document.getElementById('initialValue').value);
var endingValue = parseFloat(document.getElementById('endingValue').value);
var dividends = parseFloat(document.getElementById('dividends').value);
var years = parseFloat(document.getElementById('investmentYears').value);
// Handle optional dividends input
if (isNaN(dividends)) {
dividends = 0;
}
// Validation
if (isNaN(initialValue) || isNaN(endingValue) || isNaN(years) || initialValue <= 0 || years <= 0) {
alert("Please enter valid positive numbers for the initial investment, ending value, and years.");
return;
}
// Calculate Total Gain
var totalProfit = (endingValue – initialValue) + dividends;
// Calculate Total Return Percentage
var totalReturnPct = (totalProfit / initialValue) * 100;
// Calculate Annualized Return (CAGR)
// Formula: [(End Value + Dividends) / Start Value] ^ (1/n) – 1
var annualizedReturnPct = (Math.pow((endingValue + dividends) / initialValue, 1 / years) – 1) * 100;
// Format results
var resultArea = document.getElementById('resultArea');
var totalReturnAmountDiv = document.getElementById('totalReturnAmount');
var totalReturnPercentDiv = document.getElementById('totalReturnPercent');
var annualizedReturnDiv = document.getElementById('annualizedReturn');
resultArea.style.display = "block";
totalReturnAmountDiv.innerHTML = "Total Profit: $" + totalProfit.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
totalReturnPercentDiv.innerHTML = "Total Return: " + totalReturnPct.toFixed(2) + "%";
annualizedReturnDiv.innerHTML = "Annualized Return (CAGR): " + annualizedReturnPct.toFixed(2) + "%";
// Smooth scroll to results
resultArea.scrollIntoView({ behavior: 'smooth', block: 'nearest' });
}