Simple Rate of Return Calculator
The rate of return tells you how much an investment gained or lost, expressed as a percentage of what you put in. This calculator gives two views of that figure. Total return measures the overall percentage change across the whole holding period, combining the rise or fall in value with any income such as dividends or interest you received. Annualized return restates that total as an equivalent steady yearly rate, which makes investments held for different lengths of time directly comparable. You enter a beginning value, an ending value, any income received, and the holding period in years, and the calculator does the rest. For a holding period of exactly one year, the two figures are identical; for longer periods, the annualized rate is lower than the raw total because the gain is spread across more years. Use it to benchmark a stock, a fund, a property or a savings balance against alternatives, or to check whether an investment beat inflation. Every figure here is computed deterministically from the standard return formulas shown below, never estimated, and the worked example reconciles exactly to the calculator's default inputs so you can follow each step and trust the result.
Rate of return is the gain over what you started with: (ending + income - beginning) / beginning. Growing $5,000 to $6,200 in a year is a 24.00% return.
Rate of return formula
Total return % = ( (ending + income - beginning) / beginning ) x 100
Annualized return % = ( ((ending + income) / beginning)^(1 / years) - 1 ) x 100
ending = ending value, beginning = beginning value
income = dividends or interest received
years = holding period in years
Total return adds any income to the change in value and divides by what you started with. Annualized return takes the same growth multiple, the ending value plus income over the beginning value, and finds the steady yearly rate that would produce it over the holding period. When the period is one year, the two results are the same.
Worked example
You invested 5,000, it is now worth 6,200, you received no income, and you held it for one year.
- Gain: 6,200 + 0 - 5,000 = 1,200
- Total return: 1,200 / 5,000 = 0.2400, or 24.00%
- Growth multiple: (6,200 + 0) / 5,000 = 1.2400
- Annualized: (1.2400^(1 / 1) - 1) x 100 = 24.00%
The total return is 24.00% and, over one year, the annualized return is also 24.00%. These are the calculator's default inputs, so the results above match the widget exactly.
The same 24% total return, annualized over different periods
A 24.00% total gain (a 1.24 growth multiple) becomes a smaller yearly rate the longer it is spread.
| Holding period | Total return | Annualized return |
|---|---|---|
| 1 year | 24.00% | 24.00% |
| 2 years | 24.00% | 11.36% |
| 3 years | 24.00% | 7.43% |
| 5 years | 24.00% | 4.40% |
Return and performance concepts: US Securities and Exchange Commission, Investor.gov.
Rate of return calculator: frequently asked questions
What is the rate of return?
The rate of return is the gain or loss on an investment expressed as a percentage of the amount you put in. It combines any change in the value of the asset with income such as dividends or interest received along the way. A positive rate of return means the investment grew; a negative one means it shrank. It is the simplest way to compare how different investments performed.
What is the difference between total and annualized return?
Total return is the overall percentage gain across the whole holding period, no matter how long that was. Annualized return restates that gain as an equivalent yearly rate, smoothing it over the number of years held. Annualizing makes returns from investments held for different lengths of time directly comparable, because it answers what the steady yearly rate would have been.
How do I calculate annualized return?
Divide the ending value plus any income by the beginning value to get the growth multiple, raise that to the power of one divided by the number of years, then subtract one and multiply by 100. For a holding period of exactly one year, the annualized return equals the total return. For longer periods, annualizing produces a lower figure than the raw total.
Should I include dividends and interest?
Yes. A return that ignores income understates performance. The income or dividends field lets you add cash you received during the holding period, such as dividends, coupon interest, or distributions, so the calculator measures total return rather than price change alone. If you reinvested that income, this simple measure still captures it as cash received.
What are the limits of a simple rate of return?
This calculator measures return from a single starting point to a single ending point, plus income, so it does not account for the timing of multiple deposits or withdrawals. For cash flows that arrive at different dates, a money-weighted measure such as the internal rate of return gives a more precise answer. Simple and annualized return remain a clear, quick benchmark.
Official sources
- Investment return, performance and investing basics: US Securities and Exchange Commission, Investor.gov. As at 24 June 2026.
Reviewed by the CalculatorHub team, edited by James Graham, 24 June 2026. See our methodology. This is general information, not financial, tax, legal or investment advice.