The basic formula: what you gained, divided by what you started with

Investment return is the profit or loss you made on money you invested, shown as a percentage. The simplest way to calculate it is: take the amount your investment grew (or shrank), divide it by the amount you started with, and multiply by 100 to get a percentage.

The formula looks like this: (Ending Value − Starting Value) ÷ Starting Value × 100 = Return %

If you put $1,000 into a stock and it's now worth $1,150, your return is ($1,150 − $1,000) ÷ $1,000 × 100 = 15%. That's a 15% gain. If it dropped to $900, your return is ($900 − $1,000) ÷ $1,000 × 100 = −10%. That's a 10% loss, shown as a negative number.

Key Takeaways

  • Simple return divides your profit or loss by your starting amount and converts it to a percentage, and works for any single investment you hold for any length of time.
  • Annualized return converts your total return into a yearly rate, so you can compare investments you held for different lengths of time.
  • Total return includes dividends and interest reinvested, while price return counts only the change in the investment's value itself.
  • Dollar-weighted return accounts for the timing of deposits and withdrawals, which matters when you add money to an account over time.

When you need to annualize your return

Simple return tells you what you made overall, but it doesn't account for time. If you made 15% in one year, that's very different from making 15% in five years. To compare investments fairly, you need to convert your return into a yearly rate.

The formula is: (Ending Value ÷ Starting Value) ^ (1 ÷ Years Held) − 1 × 100 = Annualized Return %

If you invested $1,000 and it grew to $1,610 over five years, your annualized return is ($1,610 ÷ $1,000) ^ (1 ÷ 5) − 1 × 100 = 10% per year. This is called compound annual growth rate, or CAGR. It smooths out the ups and downs year to year and shows you the average yearly growth rate.

Most brokerage statements and fund fact sheets show annualized returns for this reason — they let you compare a fund that's been around for 3 years against one that's been around for 10.

Total return versus price return

When a stock or fund pays you a dividend or interest, that money is part of your return. Total return includes those payments. Price return counts only the change in the investment's value itself.

If you bought a stock for $100, it's now worth $110, and it paid you $3 in dividends along the way, your total return is ($110 + $3 − $100) ÷ $100 × 100 = 13%. Your price return is ($110 − $100) ÷ $100 × 100 = 10%.

Most of the time, you want total return, because that's the real money that came to you. Dividend-paying stocks and bond funds often look weaker on price return alone, but total return shows the full picture. Check what your brokerage or fund company is reporting — they should label it clearly.

How to handle deposits and withdrawals

If you add money to an investment account over time, or withdraw money, simple return becomes misleading. You need dollar-weighted return, also called money-weighted return or internal rate of return (IRR).

Dollar-weighted return accounts for when you put money in and when you took it out. If you invested $1,000 on January 1 and another $1,000 on July 1, and your account is worth $2,200 at year-end, your dollar-weighted return is lower than if you'd invested both amounts on January 1 — because the second $1,000 had less time to grow.

Most brokerage platforms calculate this for you on your statement, often labeled as "internal rate of return" or "money-weighted return." If yours doesn't, you can use a spreadsheet with the XIRR function (in Excel or Google Sheets) to calculate it. You enter each deposit and withdrawal with its date, plus your ending balance, and the function solves for the return rate.

What to do with fees and taxes

Your brokerage statement shows your return before fees and taxes. If you paid a 1% annual fee, or you owe capital gains tax on profits, your actual take-home return is lower.

To calculate return after fees, subtract the fee from your ending value before you do the math. If your account grew to $1,150 but you paid $10 in fees, use $1,140 as your ending value instead.

Taxes are trickier because they depend on your tax bracket and how long you held the investment. A short-term capital gain (held less than one year) is taxed as ordinary income, while a long-term gain (held over one year) gets a lower rate. You can calculate your after-tax return once you know what you owe, but that usually happens at tax time, not during the year.

Using a spreadsheet to track multiple investments

If you own several stocks, funds, or accounts, a spreadsheet makes it easy to calculate return for each one and see which is performing best. Set up columns for: investment name, starting value, ending value, time held, and return percentage.

In the return column, use the formula =(C2-B2)/B2*100 (where B is starting value and C is ending value). Copy it down for each investment. If you want annualized return, use =((C2/B2)^(1/D2)-1)*100 (where D is years held).

This approach also helps you spot which investments are dragging down your overall performance and which are doing well. Over time, you'll see patterns in what works for you.

Why your return might not match what you expected

If you calculated your return and it doesn't match what your brokerage shows, check a few things. First, make sure you're using the right starting and ending dates — your statement may show returns for a calendar year, but you may have bought the investment mid-year. Second, confirm whether you're looking at total return or price return. Third, check whether dividends or interest were reinvested or paid out in cash — reinvested amounts are included in the ending value, but paid-out amounts are not.

If you added or withdrew money during the period, your simple return won't match the brokerage's dollar-weighted return. That's normal and expected. The brokerage number is more accurate for your situation.

Frequently Asked Questions

What's the difference between return and yield?

Return is the total profit or loss on an investment over a specific period you choose. Yield is the income (dividends or interest) an investment produces in a year, shown as a percentage of its current price. A bond might have a 4% yield but a 6% total return if its price also rose.

Should I compare my returns to the S&P 500?

Yes, but only if you're comparing the same type of investment over the same time period. If you own individual stocks, compare to a stock index. If you own bonds, compare to a bond index. And make sure you're looking at the same years — a fund that beat the index over five years might have underperformed over three years.

How do I calculate return if I reinvested dividends?

Use total return, which your brokerage calculates for you. It automatically includes reinvested dividends in the ending value. If you're calculating by hand, add any reinvested dividends to your ending value before you subtract your starting value.

Can return be negative?

Yes. If your investment lost value, your return is negative. A stock that dropped from $100 to $80 has a −20% return. Negative returns are normal in investing, especially in down market years.

Why does my annualized return look different from my simple return?

Because annualized return spreads your total gain or loss across the years you held the investment. A 30% gain over five years is about 5.4% per year when annualized. The longer you hold an investment, the bigger the difference between simple and annualized return.