Rate of Return Calculator

Rate of Return Calculator: Total, Annualized, ROI, CAGR and IRR

A rate of return calculator tells you how much an investment gained or lost, as a percentage of what you put in. This free tool goes further than a single number. It handles deposits, dividends, fees, tax, inflation and uneven cash flows.

Use it if you own stocks, ETFs, index funds, mutual funds, a rental property or a retirement account. It also suits anyone comparing two investments that ran for different lengths of time.

This matters because a raw gain hides the time it took. A 45% gain in one year is a great result. A 45% gain over ten years is not.

What Is the Rate of Return?

The rate of return (RoR) is the net gain or loss on an investment over a period, shown as a percentage of the starting value. It is also called the return rate, percent return, investment return or return on investment. People often write it as “ROR.”

The basic rate of return formula is:

Rate of Return = (Ending Value − Beginning Value) ÷ Beginning Value × 100

Start with $10,000 and end with $14,500. Your total return is 45%. That is the rate of return meaning in one line: gain divided by cost.

A full answer also adds income (dividends, interest, rent) and subtracts fees and taxes. The calculator does all of that for you.

Rate of Return Calculator: Quick Start Guide

The calculator is a suite of 12 connected cards. Each card works alone. Key results fill into the next card automatically.

1. Enter your beginning value and ending value.
2. Choose how you measure time: a length of time or exact dates.
3. Add any income, fees, deposits or withdrawals.
4. Pick a calculation method: Simple, Modified Dietz or Time-Weighted.
5. Read your total return, annualized return and after-tax return.

You can change the currency, and 30 are supported. Reference rates inside the tool are editable estimates as of Q4 2026.

Every Input Explained (Card 1: The Anchor Calculator)

The first card is the main rate of return calculator. Here is what each field means.

Pro tip: Use real dates when you can. Dated deposits make the Dietz and Time-Weighted methods far more accurate.

Every Result Explained

The calculator returns eight results. Each one answers a different question.

• Total Rate of Return: your percentage gain or loss over the whole period, before fees and tax.
• Net Gain / Loss: your dollar profit after income, fees and tax.
• Annualized Return: the steady yearly rate that would give the same total result.
• Return After Fees & Tax: the return you actually keep, shown in total and per year.
• Equivalent Rate: the nominal rate at your chosen compounding frequency.
• Investment Multiple (MOIC): total value returned per $1.00 invested. Above 1.00x means a profit.
• Doubling Time: the exact years needed to double your money at your rate.
• Holding Period: the length used to annualize.

You also get a year-by-year table and a value bridge chart. The chart shows how your beginning value, deposits, growth, income, fees and taxes add up to your net ending value.

How to Calculate Rate of Return (Step by Step)

You can do this by hand to check the tool.

Step 1. Subtract the beginning value from the ending value.
Step 2. Add any income received.
Step 3. Subtract fees and taxes.
Step 4. Divide the result by the beginning value.
Step 5. Multiply by 100 to get a percentage.

Written as an equation, the calculator uses this form:

Simple RoR = (Ending Value + Income − Beginning Value − Fees − Taxes) ÷ Beginning Value

Many people ask how to work out the rate of return when money moves in and out. That is where the other two methods help.

Simple vs. Modified Dietz vs. Time-Weighted: Which Method Should You Use?

The three methods answer slightly different questions.

Modified Dietz formula: R = (EV − BV − net cash flows) ÷ (BV + Σ[cash flow × (T − t) ÷ T]). Each deposit is weighted by how long it stayed invested.

Time-Weighted formula: (1+R₁)(1+R₂)…(1+Rₙ) − 1. You multiply the returns of each sub-period.

The CFA Institute’s Global Investment Performance Standards (GIPS) call for time-weighted returns when comparing managers fairly. Money-weighted measures such as Dietz and IRR show what you personally earned, because they reflect when you added cash.

Worked Example: One Account, Three Answers

You start the year with $20,000. Six months in, you deposit $5,000. You end the year with $28,000.

• Gain: 28,000 − 20,000 − 5,000 = $3,000
• Simple method: 3,000 ÷ 25,000 = 12.00%
• Modified Dietz: the $5,000 was invested for half the year, so the base is 20,000 + 2,500 = 22,500. Return = 3,000 ÷ 22,500 = 13.33%
• Time-Weighted: say the account was worth $21,000 just before the deposit. First half: 21,000 ÷ 20,000 = +5.00%. Second half: 28,000 ÷ 26,000 = +7.69%. Combined: 1.05 × 1.0769 − 1 = 13.08%

The Simple method understates this return, because it treats the late deposit as if it worked all year. That is a good reason to choose the method that fits your situation.

Annualized Rate of Return: Why Time Changes Everything

The annualized return (also called the annual rate of return, yearly return or CAGR) converts any total gain into one per-year rate. It lets you compare a 2-year investment with a 7-year one.

Annualized Return = (1 + Total Return)^(1 ÷ Years) − 1

Take the first example. A 45% total return over 3 years is 1.45^(1/3) − 1 = 13.18% per year.

For a deeper look, try our annualized return and CAGR calculator mode inside the suite, or use the percentage change calculator for simple before-and-after comparisons.

Warning: Annualizing a period shorter than one year can look dramatic. A 6% gain in one month “annualizes” to about 101% a year. That rate rarely repeats, so treat short-period numbers with care.

Practical Example: Stock Return With Fees, Dividends and Tax

Say you buy a stock fund holding for $10,000. Three years later it is worth $14,500. You also received $600 in dividends, paid $100 in fees, and your tax rate on gains is 15%.

Results:

• Headline total return: 51.00%, which is 14.73% a year
• Return after fees and tax: 42.50%, which is about 12.53% a year
• Investment multiple (MOIC): 15,100 ÷ 10,000 = 1.51x
• Doubling time at 14.73%: about 5.05 years. The Rule of 72 gives 72 ÷ 14.73 ≈ 4.9 years.

The gap between 51% and 42.5% is your cost of investing. It is one of the most useful numbers in the report. If you hold stocks, the stock dividend calculator and dividend yield calculator help you estimate the income piece.

ROI vs. Rate of Return vs. IRR vs. CAGR

These terms overlap, and people mix them up. Here is the difference.

ROI and Investment Return (Card 2)

The return on investment calculator card adds every cost line, so rental owners can include maintenance, insurance and property tax. The formula is:

ROI = Net Profit ÷ Cost Base

Net profit equals final value plus income, minus the investment, costs and taxes. You can pick total cost, initial investment only, or average investment as the base. It also shows your break-even point and tests your result against a target ROI.

Example: a rental bought for $60,000, sold for $82,000, with $14,400 in rent and $9,500 in costs. Gain before tax: 82,000 + 14,400 − 60,000 − 9,500 = $26,900. At 15% tax, net profit is about $22,865. On a $69,500 cost base, ROI is about 32.9%.

If you want the business-side versions, see our return on invested capital calculator, return on assets calculator, return on equity calculator and return on capital employed calculator. The DuPont analysis calculator shows how those returns fit together.

CAGR vs. Arithmetic Average

An average return can mislead you. Say an investment gains 50% in year one and loses 50% in year two.

• Arithmetic average: (50% + −50%) ÷ 2 = 0%
• Geometric average (CAGR): (1.5 × 0.5)^(1/2) − 1 = −13.4% per year

Your $10,000 grew to $15,000, then fell to $7,500. You lost money, even though the average says 0%. The effect is called volatility drag, and it is roughly half the variance of returns. A portfolio with 20% annual volatility gives up about 2 points of compounded return versus its arithmetic average.

IRR, XIRR, MIRR and NPV (Card 9)

The IRR calculator handles uneven cash flows. It also reports XIRR (for dated flows), MIRR (which uses separate borrowing and reinvestment rates), NPV, profitability index and payback. You then compare IRR against your hurdle rate for an accept or reject verdict.

Limitation: if cash flows switch between positive and negative more than once, a project can have several IRRs. In that case, rely on NPV across a range of rates. Our payback period calculator and WACC calculator pair well with this card.

Accounting Rate of Return (Card 12)

ARR = Average Annual Accounting Profit ÷ Initial Investment × 100. It ignores the time value of money, so use it for a quick screen, not a final decision. Card 12 also averages your yearly returns and ranks you against benchmarks.

Expected Rate of Return and Required Rate of Return (Card 8)

The expected rate of return is the return you predict. The required rate of return is the minimum you demand for taking the risk. The calculator offers four methods:

• Scenario-weighted: E(R) = Σ(probability × return)
• CAPM: Required = Risk-Free Rate + Beta × (Market Return − Risk-Free Rate)
• Gordon dividend growth: r = D₁ ÷ P₀ + g
• Build-up: risk-free rate plus equity, size and specific premiums

Caution: beta comes from past prices, so it shifts with the time window you pick. Treat the required return as a range and stress-test it. Our Gordon growth model calculator, intrinsic value calculator and dividend growth rate calculator work well alongside it.

Real Rate of Return: What Inflation, Fees and Tax Take

The real rate of return shows what your money can actually buy after inflation. The calculator uses the exact Fisher equation:

Real Return = (1 + Nominal) ÷ (1 + Inflation) − 1

Example: 8% nominal return, 3% inflation, 0.5% fees, 15% tax.

• Real return before costs: 1.08 ÷ 1.03 − 1 = 4.85%
• After-tax nominal: (8% − 0.5%) × 0.85 = 6.375%
• Real after-tax return: 1.06375 ÷ 1.03 − 1 = 3.28%
• Break-even nominal return: 3% ÷ 0.85 + 0.5% = 4.03%

So an “8% return” left you with about 3.3% in real buying power. U.S. CPI has averaged roughly 3% over the long run, but single decades have ranged from under 2% to above 7%. The Bureau of Labor Statistics publishes the official CPI data. Check your own numbers with our inflation calculator or the salary inflation calculator.

Benchmarks: How Does Your Return Compare?

Card 12 compares your result with editable long-run presets. These are historical averages, not forecasts.

Dividends have historically supplied roughly a third of long-run U.S. stock returns. That is why price-only comparisons understate what investors earn. The calculator’s guide ranges are: conservative 3–5%, moderate 5–8% and aggressive 8–10%+.

Short periods can swing far from these averages. One bad or great year says little about the long run.

Investment Growth, Index Funds and Portfolios (Cards 4, 6 and 7)

Planning ahead? Card 4 projects a lump sum plus regular contributions, with yearly step-ups, fees, inflation and tax. The future value formula is FV = P(1+r/m)^(mt) + PMT × [((1+r/m)^(mt) − 1) ÷ (r/m)]. For simple growth, see our future value calculator, compound interest calculator and investment calculator.

Card 6 is the S&P 500, index fund and ETF return calculator. It adds dividend yield, expense ratio and a conservative, base or optimistic scenario. It also shows fee drag, the dollar cost of fund fees over time.

Card 7 rolls up to 10 holdings into one weighted return and compares it with a benchmark. It also covers mutual fund sales loads. A 5.75% front-end load on $10,000 leaves only $9,425 invested, so the fund must earn about 6.1% just to break even.

Reinvesting dividends? Try the dividend reinvestment calculator and the yield on cost calculator. To convert quoted rates, use the effective annual rate calculator or the APY calculator.

IRA, Roth IRA and Retirement Returns (Card 11)

The retirement card projects your balance with employer match, contribution limits, tax treatment and a safe withdrawal income. The calculator’s 2026 reference limits are $24,500 for a 401(k) plus $8,000 catch-up at age 50+, and $7,500 for an IRA plus $1,100 catch-up. Confirm current limits at irs.gov each year, and note that Roth IRA eligibility phases out at higher incomes.

Older investors: if you are within 10 years of retirement, a poor early return hurts more, because you have less time to recover. Use the conservative scenario and test lower returns.

Related tools: the 401(k) calculator, safe withdrawal rate calculator and Coast FIRE calculator. A tax bracket calculator helps you pick a realistic tax rate.

Assumptions and Limitations

No calculator can predict the future. Keep these limits in mind:

• Past returns do not guarantee future results. Benchmark presets are averages.
• Results depend on your inputs. Missing fees or costs inflate your return.
• Total loss caps at −100%. The tool will reject anything beyond that.
• Taxes vary by country and account type. The rate you enter is your own estimate.
• Volatile assets such as crypto can make annualized figures misleading. A short, sharp gain does not repeat.
• Time-weighted results need accurate pre-deposit values. If you leave them blank, the tool estimates them.

Common Mistakes to Avoid

1. Ignoring time. Compare annualized returns, not total returns.
2. Forgetting fees and tax. A 1% fee compounds against you every year.
3. Using an average that hides losses. Prefer CAGR over the arithmetic average.
4. Mixing up ROI and IRR. ROI ignores timing. IRR does not.
5. Comparing unlike periods. Always match the dates when you benchmark.
6. Treating a forecast as a promise. Use ranges, not single numbers.

Best Practices

• Run each calculation at three rates (low, base, high).
• Include every cost, even small ones.
• Re-check your return once a year, on the same date.
• Judge funds with time-weighted returns. Judge yourself with money-weighted returns.

Expert Guidance and Research Notes

• CFA Institute (GIPS): time-weighted returns are the standard for fair manager comparison.
• SEC Investor.gov and FINRA: both urge investors to look at fees, since fees reduce returns every year.
• Volatility drag: compounded return trails the arithmetic average by about half the variance.
• Contribution rate: the amount you invest and the time you stay invested usually matter more than picking the “best” return, because contributions are the one input you control.

This tool is for information only and is not professional advice. Talk to a licensed advisor before you act on any result.

Frequently Asked Questions

What is a good rate of return on investment?

It depends on the asset and the risk. The S&P 500 has averaged roughly 10% a year nominal over the long run, or about 7% after inflation. Savings accounts and Treasury bills pay less because they carry less risk. Compare your result with a benchmark that matches your holdings.

How do I calculate the rate of return on an investment?

Subtract the beginning value from the ending value, add any income, then subtract fees and taxes. Divide by the beginning value and multiply by 100. To compare different time spans, annualize the result using (1 + return)^(1/years) − 1.

What is the difference between rate of return and ROI?

Rate of return usually measures price growth plus income on a starting value. ROI divides net profit by your total cost, including fees, maintenance and other expenses. They give the same answer when no extra costs exist.

What is the annual rate of return formula?

The annual rate of return formula is (Ending Value ÷ Beginning Value)^(1 ÷ Years) − 1. This is also called CAGR. It gives one smooth yearly rate for a multi-year investment.

What is the difference between IRR and annualized return?

Annualized return fits one start value and one end value. IRR handles many cash flows at different times, such as regular deposits or rental income. If you have only a start and an end, they will match.

Does the rate of return include dividends?

Total return includes dividends, interest and rent. A price-only return leaves them out. Dividends have historically supplied about a third of long-run U.S. stock returns, so leaving them out understates your gain.

How do I calculate a stock rate of return?

Use (Sell Price − Buy Price) × Shares for the capital gain. Add dividends, then subtract commissions and tax. Divide by your purchase cost. The stock card also handles splits, DRIP and capital gains tax rules by region.

What is a good expected rate of return for retirement planning?

Many planners use a range, not one number. The conservative guide is 3–5%, moderate is 5–8%, and aggressive is 8–10% or more. Test your plan at the low end, since a lower return shows you the risk in your plan.

What is the real rate of return?

The real rate of return is your return after inflation. For example, an 8% return with 3% inflation gives (1.08 ÷ 1.03) − 1, which is about 4.85%. Fees and tax lower it further.

How is the average rate of return different from CAGR?

An average return adds yearly returns and divides by the count. CAGR is the steady rate that links your start and end values. CAGR is lower when returns are volatile, and it is the more honest figure.

Can a rate of return be negative?

Yes. A negative rate of return means a loss. The lowest possible value is −100%, which is a total loss of your money.

How do I calculate monthly rate of return?

Divide the monthly gain by the starting value for that month. To convert a monthly return into a yearly one, use (1 + monthly return)^12 − 1. The annualized card includes a monthly converter.

What is the rate of return on an IRA?

An IRA’s return is the growth of the account’s value, plus contributions’ effect, over time. Because you add money, use Modified Dietz or time-weighted returns, not the simple method. The retirement card projects your balance and withdrawal income.

Is this rate of return calculator free?

Yes. The calculator is free, runs in your browser, and needs no sign-up.

Conclusion

A single return number can hide as much as it shows. Time, cash flows, fees, tax and inflation all change the real answer.

This rate of return calculator brings those pieces together. You can measure total and annualized return, test ROI, find your IRR, compare against benchmarks and project future growth. Run your own numbers above, then explore our full set of finance calculators or look up terms in the glossary.