To calculate the rate of return, you’ll need the initial investment value, the final investment value, and the time period over which the investment was held.
Page written by Ian Hawkins. Last reviewed on May 19, 2025. Next review due July 1, 2026.
This calculator is intended for illustration purposes only and exact payment terms should be agreed with a lender before taking out a loan.
Rate of return is the gain or loss on an investment over a specific period, typically expressed as a percentage of the initial investment amount. It calculates the profitability of an investment relative to its cost and is a key metric used by investors to assess the performance and potential of different investment opportunities.
The rate of return takes into account both capital gains (or losses) and income generated from the investment. It provides investors with a standardised way to compare the returns of various investments and evaluate their effectiveness in achieving financial goals.
The formula for calculating the rate of return is as follows:
Rate of Return=(Final Value−Initial Value)/Initial Value×100
Here’s how to calculate it step-by-step:
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