Calculate Returns on Investment

Investment Return Calculator

function calculateInvestmentReturns() { var initialInvestment = parseFloat(document.getElementById('initialInvestment').value); var finalValue = parseFloat(document.getElementById('finalValue').value); var investmentPeriod = parseFloat(document.getElementById('investmentPeriod').value); var resultsDiv = document.getElementById('investmentResults'); if (isNaN(initialInvestment) || isNaN(finalValue) || isNaN(investmentPeriod)) { resultsDiv.innerHTML = 'Please enter valid numbers for all fields.'; return; } if (initialInvestment <= 0) { resultsDiv.innerHTML = 'Initial Investment must be greater than zero.'; return; } if (investmentPeriod <= 0) { resultsDiv.innerHTML = 'Investment Period must be greater than zero.'; return; } var totalProfitLoss = finalValue – initialInvestment; var roiPercentage = (totalProfitLoss / initialInvestment) * 100; var annualizedReturn = (Math.pow((finalValue / initialInvestment), (1 / investmentPeriod)) – 1) * 100; var resultHtml = '

Investment Results:

'; resultHtml += 'Total Profit/Loss: $' + totalProfitLoss.toFixed(2) + "; resultHtml += 'Return on Investment (ROI): ' + roiPercentage.toFixed(2) + '%'; resultHtml += 'Annualized Return (CAGR): ' + annualizedReturn.toFixed(2) + '%'; resultsDiv.innerHTML = resultHtml; }

Understanding Your Investment Returns

Calculating the returns on your investments is crucial for understanding the performance of your portfolio and making informed financial decisions. This Investment Return Calculator helps you quickly determine key metrics like your total profit or loss, the overall Return on Investment (ROI), and the Compound Annual Growth Rate (CAGR).

What is Return on Investment (ROI)?

Return on Investment (ROI) is a widely used metric to evaluate the profitability of an investment. It measures the gain or loss generated on an investment relative to the amount of money invested. ROI is typically expressed as a percentage.

The formula for ROI is:

ROI = ((Final Value of Investment - Initial Investment) / Initial Investment) * 100%

A positive ROI indicates a profit, while a negative ROI indicates a loss. It's a simple and effective way to compare the efficiency of different investments.

What is Compound Annual Growth Rate (CAGR)?

While ROI gives you the total return over the entire investment period, the Compound Annual Growth Rate (CAGR) provides the average annual rate at which an investment has grown over a specified period longer than one year. It smooths out volatile returns and gives a more accurate picture of an investment's consistent growth.

The formula for CAGR is:

CAGR = (((Final Value / Initial Investment)^(1 / Number of Years)) - 1) * 100%

CAGR is particularly useful for comparing investments that have different investment horizons or for understanding the average growth of an investment over multiple years.

How to Use the Calculator

  1. Initial Investment ($): Enter the total amount of money you initially invested. This includes the purchase price and any upfront costs.
  2. Final Investment Value ($): Input the current market value of your investment or the amount you sold it for. This should be net of any selling fees or commissions.
  3. Investment Period (Years): Specify the total number of years you held the investment. If it's less than a year, you can use decimals (e.g., 0.5 for six months).
  4. Click "Calculate Returns" to see your Total Profit/Loss, ROI, and Annualized Return.

Example Calculation:

Let's say you invested $10,000 in a stock. After 5 years, you sold the stock for $15,000.

  • Initial Investment: $10,000
  • Final Investment Value: $15,000
  • Investment Period: 5 Years

Using the calculator:

  • Total Profit/Loss: $15,000 – $10,000 = $5,000
  • ROI: (($15,000 – $10,000) / $10,000) * 100% = (5,000 / 10,000) * 100% = 50.00%
  • CAGR: (((15,000 / 10,000)^(1 / 5)) – 1) * 100% = ((1.5)^(0.2) – 1) * 100% = (1.08447 – 1) * 100% = 8.45%

This means your investment grew by 50% over five years, which translates to an average annual growth rate of approximately 8.45%.

Understanding these metrics empowers you to assess your investment decisions and plan for future financial goals more effectively.

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