Investment Return Calculator
Calculate the Return on Investment (ROI) for your investments.
How Well Are Your Investments Actually Performing?
It's easy to see that an investment has grown, but to make smart decisions, you need to know *how well* it has performed. This calculator helps you measure the profitability of any investment by calculating two key metrics: the total Return on Investment (ROI) and the annualized return. This allows you to evaluate the success of your financial decisions and compare different investment opportunities fairly.
Total Return vs. Annualized Return: What's the Difference?
Understanding this difference is crucial for any investor. This calculator shows you both:
- Total Return (ROI): This is the simplest measure of profit. If you invest $1,000 and it becomes $1,500, your total return is 50%. While useful, it's a blunt instrument because it ignores *how long* it took to earn that return.
- Annualized Return: This is a more powerful metric. It tells you the geometric average amount of money the investment earned each year. A 50% return over 5 years is very different from a 50% return over 1 year. The annualized return allows for an apples-to-apples comparison of investments with different time horizons.
Common Investment Mistakes to Avoid
Focusing Only on Total Return
A common mistake is chasing high total returns without considering the time frame. An investment that returns 100% in 10 years has an annualized return of about 7.2%, while an investment that returns 50% in 3 years has a much better annualized return of over 14%.
Ignoring Fees and Taxes
This calculator shows your gross return. Remember that your actual take-home profit will be lower after accounting for trading fees, expense ratios (for mutual funds), and capital gains taxes. High fees can significantly erode your returns over time.